Trade tensions are returning to the forefront of global markets, with Canada imposing retaliatory tariffs on about $20bn of US goods after trade negotiations with Washington broke down.
The renewed threat of tariffs is also beginning to distort commodity markets. US buyers have accelerated purchases of copper ahead of the potential introduction of duties, helping push prices to record levels as companies seek to build inventories before any measures take effect.
Geopolitical tensions are adding to inflationary pressures elsewhere. The lack of progress in negotiations between Russia and Ukraine has raised concerns about the security of Black Sea wheat supplies, threatening another source of volatility for global food markets.
Energy markets are facing similar risks. Brent crude was trading at about $97.50 a barrel, close to a six-week high, as renewed tensions between the US and Iran raised concerns about prolonged disruption to oil supplies from the Gulf.
The Strait of Hormuz remains the most significant potential chokepoint. Shipping traffic has slowed amid Iranian threats of retaliation, while traders are increasingly assessing the possibility that disruption could persist for an extended period.
European and UK natural gas prices have also risen to three-and-a-half-year highs as the conflict continues to disrupt energy markets. Qatar has already extended its suspension of some liquefied natural gas shipments, while European gas storage levels remain below their usual seasonal average.
The combination of trade restrictions, supply-chain disruption and geopolitical risk is complicating the outlook for central banks, which had been hoping that previous inflationary pressures would continue to ease.
Yet there are signs that the underlying global economy remains relatively resilient. Data released over the past week have pointed to stronger activity and continued labour-market resilience, particularly in the US.
The conflicting signals leave policymakers facing a difficult balance. Economic activity remains sufficiently robust to sustain demand, while higher commodity prices and renewed supply disruptions threaten to push inflation higher just as investors had begun to expect a more benign price environment.
For financial markets, the result is a more complicated inflation outlook in which trade policy and geopolitics are once again becoming as important as domestic demand in determining the path of prices and interest rates.