You know that moment in a movie when the villain thinks he's got the perfect plan, and then someone pulls the rug out from under him — but instead of backing down, he doubles down? Yeah. Welcome to the latest episode of America's tariff soap opera.
On Friday, the United States Supreme Court ruled 6-3 that Donald Trump did not have the legal authority to impose those massive tariffs he shoved down the world's throat last April, using IEEPA (the International Emergency Economic Powers Act). In plain English: the court said "you can't do that, buddy."
And what did Trump do? What any Breaking Bad character would do when backed into a corner.
He doubled down.
The Predictable Counterattack
Hours after the ruling, the Trump administration slapped new tariffs of up to 15% — effective immediately — on a whole bunch of trading partners. The guy got a "no" from the Judiciary and responded with a "screw it, I found another way."
The new way? Section 122 of the Tariff Act of 1974. A law older than most Wall Street traders. But here's the detail the market needs to pay attention to: this section limits the tariffs' validity to 150 days — meaning mid-July — after that, Congress has to sign off.
And this is where it gets interesting. The administration has already signaled it plans to use Sections 232 and 301 of the same law to fill in the gaps. In practice, this means the tariff war could drag on for years.
Years, my friend. Not months. Years.
Europe Is Pissed. And Rightfully So.
European Union leaders didn't even bother hiding their outrage. The new tariffs trash trade agreements that were negotiated with the American government itself just last year. On Monday, the EU postponed yet again a crucial vote on the deal with the US.
Picture the scene: you spend months sitting at a negotiating table, reach an agreement, shake the guy's hand — and the following weekend he changes the rules of the game. Who's going to want to negotiate again?
Nobody.
And that's exactly what Mark Zandi, chief economist at Moody's Analytics, told CNBC: "Nothing but downside" for the American economy.
"Businesses don't know what's going to happen," Zandi said. "They're going to invest less, hire less, be less aggressive in their expansions."
Translation: when the casino owner changes the rules mid-game, the players go to another casino.
And Guess Who's Smiling?
China.
While the world tries to figure out the next chapter of America's tariff circus, Chinese exports grew 6.6% in December year-over-year — beating analyst expectations. China's annual trade surplus hit a record.
Countries that previously traded primarily with the US are rerouting trade flows to China. It's the kind of second-order consequence Taleb would love to analyze: Trump wants to protect American industry, and the side effect is strengthening America's biggest geopolitical rival.
Ironic, isn't it?
Not Everyone's Panicking
Veronica Clark, economist at Citigroup, threw cold water on the doomsayers: the new tariffs "imply little change to the effective tariff rate or to our near-term inflation forecasts."
Fair enough. In the short term, maybe not much changes. But the market doesn't just price in the present — it prices in perceived risk. And the perceived risk of doing business with the United States is going through the roof.
As Mike Reid from the Royal Bank of Canada put it: "This changes how trade is done with the world's largest economy, and that has economic consequences."
The Real Game
Nassim Taleb would say the problem isn't the tariff itself — it's the fragility that unpredictability creates. Companies don't go under because of a tax. They go under because they can't plan. Governments don't sever relationships over a fee. They sever them because they lose trust.
And trust, once lost, is the hardest damn thing to rebuild on the planet.
Zandi summed it up with a line that should be tattooed on every economic policymaker's forehead: "The growing perception is that the US is a poorly managed economy. And, objectively speaking, they're right."
The question that remains is simple: if you were a foreign government or a multinational CEO, would you bet your chips on a country that changes the rules of the game every weekend?
Yeah. China's waiting for your answer.
