Tariffs Fragment Trade, Diverge Inflation and Test Central Banks

Escalating tariffs in 2026 are fragmenting global trade, creating divergent inflation pressures: upward in import-reliant economies like the US, deflationary in exporters such as China and Europe. Central banks face asymmetric shocks, with supply disruptions and demand adjustments complicating policy responses. IMF and BIS analyses signal risks to growth at 3.1% and persistent inflation elevation.