Weekly Buzz: Tariffs: On-again, off-again

The US Supreme Court struck down Trump's sweeping global tariffs last week, ruling that the president had overstepped his authority under the International Emergency Economic Powers Act (IEEPA).

What’s going on here?

President Trump's response was swift. Within hours, he announced a new 10% blanket tariff on all imports under a different law, the 1974 Trade Act. By Saturday, he'd raised that to 15%, the maximum allowed under the act.

Countries that bore the brunt of Trump's original tariffs are now paying less: Morgan Stanley estimates Asia's weighted average tariff falls to 17% from 20%, while China's drops to 24% from 32%. On the flip side, countries who had negotiated lower rates like the UK, the EU, and Australia, may now find themselves paying more.

The dollar fell against major currencies on Monday as confusion over US trade policy returned. According to the Yale Budget Lab, the overall effective US tariff rate now sits at 13.7%, down from 16% before the ruling. If the new 15% tariffs expire after 150 days as the Trade Act requires, that rate drops to 9.1%.

What’s the takeaway for investors?

We've seen this pattern before: tariff threats followed by a softening or a workaround. Where previous announcements triggered sharp selloffs, reactions are growing more muted as traders increasingly bet on some form of walkback.

For long-term investors, familiar lessons hold. A globally diversified portfolio means it doesn’t hinge on any single outcome, while investing regularly means you're naturally buying more when the market dips on short-term scares.

(For a portfolio that’s designed with diversification in mind, check out General Investing.)

Investor’s Corner: The narrative says panic, the fundamentals say otherwise

A viral thinkpiece by Citrini Research rattled markets this week. It paints a 2028 scenario where AI rapidly displaces high-income workers, triggering widespread unemployment and a broader economic downturn. US software stocks bore the brunt of the reaction, and the S&P 500 slipped around 1% on Monday.

To add some perspective, that scenario rests on a narrow set of forward-looking assumptions: rapid acceleration in job displacement over the next two years, limited policy response from governments, and a scenario where productivity surges while overall economic demand simultaneously collapses. 

When worry is already in the air, narratives like these can amplify market volatility. But the scenario described remains hypothetical, as AI’s eventual economic impact will depend on a wide range of factors that are still evolving – including adoption speed, corporate behavior, and policy responses. 

That means short-term market reactions may reflect shifting expectations rather than changes in underlying fundamentals. Over time, however, market performance tends to be driven by fundamentals like profits and growth, as stock prices ultimately reflect how companies perform.

AI is transformative, but disruption and opportunity tend to come hand in hand. Goldman Sachs estimates that AI could lift US productivity growth by around 1.5 percentage points annually over the next decade. For long-term investors, staying diversified and focused on the fundamentals remains essential to capturing opportunity beyond the narratives.

(For more on our views on AI in the year ahead, read our 2026 Macro Outlook.)

This article was written in collaboration with Finimize.