Trump’s Tariff War Fizzles as Wall Street Turns Toward AI-Driven Growth

All year long, one thing — Trump’s global trade war — has driven the stock market. But this week made one thing abundantly clear: that won’t be true for much longer.

Wall Street is moving on. The trade war is becoming “old news.”

Yes, the drama will continue. Trump’s tariff agenda will generate plenty of twists, turns, and TV headlines over the coming weeks. It’ll still come up at family dinners.

But on Wall Street, it’s fading into background noise — and that’s good news for investors.

Here’s why:

Earlier this week, the U.S. International Trade Court ruled that most of Trump’s 2025 tariffs are illegal. Specifically, the court found that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) — including the baseline 10% reciprocal tariff, the Liberation Day reciprocal tariffs, and the fentanyl-related tariffs — were improperly applied.

As a result, most of those tariffs are now dead in the water.

The immediate impact? Huge.

With those tariffs gone, the average effective U.S. tariff rate plunges from 13% to 6% — a stunning reversal that takes us right back to where we were in early 2024, before the tariff war began.

Let that sink in. Just two months ago, the average tariff rate was nearly 30%. That triggered fears of soaring inflation, collapsing trade flows, supply chain meltdowns, and a full-blown economic slowdown.

Now, after a flurry of pauses, delays, exemptions, deals — and a bombshell court ruling — we’re back to a manageable 6%.

It’s like waking up from a nightmare and realizing the monster under the bed was just a coat.

Sure, the Trump administration can — and likely will — try to reimpose some tariffs under other frameworks, like Section 301, Section 232, or Section 122 of the Trade Act of 1974. But those paths are slower, narrower, and more constrained by legal caps and political optics. The White House is expected to appeal the ruling, but most legal experts expect it to hold.

So here’s where we are: plenty of trade war drama in the headlines — but a lot less real-world bite. And that’s what markets care about. Not the noise. Not the politics. Just the numbers: earnings, inflation, GDP.

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To that point, consider what the Fed has said: every 1-point increase in the average tariff rate drags GDP by 0.14% and lifts inflation by 0.09%.

So when tariffs spiked from 3% to 30%, that implied a nearly 4-point GDP hit and a 2.5-point inflation lift. That’s massive.

Now? We’re at 6%. That’s a 3-point jump from 2024 — worth just a 0.4-point GDP drag and a 0.3-point inflation bump.

In the big picture, that’s noise. It’s nothing the economy can’t handle — especially with strong job growth, solid consumer spending, and booming tech investment.

Even if tariffs edge back to 8% or 10%, the macro hit will be modest. More importantly, thanks to new legal constraints, any changes will be incremental, not sudden. That’s the predictability Wall Street needed — and now has.

So while the trade war narrative might linger on cable news, its power to rattle markets is gone. That’s a green light for stocks.

And just look at where investors are turning…

The real engine now is artificial intelligence. Nvidia (NVDA) just reminded us why.

The chip giant crushed earnings expectations again, showing demand for AI compute is still on fire. The company is guiding for $45 billion in next-quarter revenue. According to Wedbush, that could unlock $360 billion to $450 billion in downstream economic impact across the AI stack — thanks to an 8x to 10x multiplier on AI chip spending.

That’s the action. That’s the opportunity. That’s where smart money is flowing.

Because let’s face it: what’s more lucrative — worrying about tariff litigation or investing in agentic AI, humanoid robotics, self-driving cars, and enterprise software automation?

The answer is obvious.

Bottom line: the trade war story isn’t over, but it’s no longer the main event. The court ruling changed the game. Tariff risk is now slower, narrower, and more predictable — and the market likes that.

In 2025, growth means AI. Nvidia made that clear. So while headlines keep spinning the tariff story, savvy investors are already chasing the real growth story: technological transformation.

That’s the story. That’s the opportunity. That’s where we’re focused.

Click here to explore the AI investments we’re tracking right now.

Sincerely,

P.S. Questions or comments about this issue? Drop us a line at langofeedback@investorplace.com.

Trump’s Tariff War Fizzles as Wall Street Turns Toward AI-Driven Growth

All year long, one thing — Trump’s global trade war — has driven the stock market. But this week made one thing abundantly clear: that won’t be true for much longer.

Wall Street is moving on. The trade war is becoming “old news.”

Yes, the drama will continue. Trump’s tariff agenda will generate plenty of twists, turns, and TV headlines over the coming weeks. It’ll still come up at family dinners.

But on Wall Street, it’s fading into background noise — and that’s good news for investors.

Here’s why:

Earlier this week, the U.S. International Trade Court ruled that most of Trump’s 2025 tariffs are illegal. Specifically, the court found that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) — including the baseline 10% reciprocal tariff, the Liberation Day reciprocal tariffs, and the fentanyl-related tariffs — were improperly applied.

As a result, most of those tariffs are now dead in the water.

The immediate impact? Huge.

With those tariffs gone, the average effective U.S. tariff rate plunges from 13% to 6% — a stunning reversal that takes us right back to where we were in early 2024, before the tariff war began.

Let that sink in. Just two months ago, the average tariff rate was nearly 30%. That triggered fears of soaring inflation, collapsing trade flows, supply chain meltdowns, and a full-blown economic slowdown.

Now, after a flurry of pauses, delays, exemptions, deals — and a bombshell court ruling — we’re back to a manageable 6%.

It’s like waking up from a nightmare and realizing the monster under the bed was just a coat.

Sure, the Trump administration can — and likely will — try to reimpose some tariffs under other frameworks, like Section 301, Section 232, or Section 122 of the Trade Act of 1974. But those paths are slower, narrower, and more constrained by legal caps and political optics. The White House is expected to appeal the ruling, but most legal experts expect it to hold.

So here’s where we are: plenty of trade war drama in the headlines — but a lot less real-world bite. And that’s what markets care about. Not the noise. Not the politics. Just the numbers: earnings, inflation, GDP.

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To that point, consider what the Fed has said: every 1-point increase in the average tariff rate drags GDP by 0.14% and lifts inflation by 0.09%.

So when tariffs spiked from 3% to 30%, that implied a nearly 4-point GDP hit and a 2.5-point inflation lift. That’s massive.

Now? We’re at 6%. That’s a 3-point jump from 2024 — worth just a 0.4-point GDP drag and a 0.3-point inflation bump.

In the big picture, that’s noise. It’s nothing the economy can’t handle — especially with strong job growth, solid consumer spending, and booming tech investment.

Even if tariffs edge back to 8% or 10%, the macro hit will be modest. More importantly, thanks to new legal constraints, any changes will be incremental, not sudden. That’s the predictability Wall Street needed — and now has.

So while the trade war narrative might linger on cable news, its power to rattle markets is gone. That’s a green light for stocks.

And just look at where investors are turning…

The real engine now is artificial intelligence. Nvidia (NVDA) just reminded us why.

The chip giant crushed earnings expectations again, showing demand for AI compute is still on fire. The company is guiding for $45 billion in next-quarter revenue. According to Wedbush, that could unlock $360 billion to $450 billion in downstream economic impact across the AI stack — thanks to an 8x to 10x multiplier on AI chip spending.

That’s the action. That’s the opportunity. That’s where smart money is flowing.

Because let’s face it: what’s more lucrative — worrying about tariff litigation or investing in agentic AI, humanoid robotics, self-driving cars, and enterprise software automation?

The answer is obvious.

Bottom line: the trade war story isn’t over, but it’s no longer the main event. The court ruling changed the game. Tariff risk is now slower, narrower, and more predictable — and the market likes that.

In 2025, growth means AI. Nvidia made that clear. So while headlines keep spinning the tariff story, savvy investors are already chasing the real growth story: technological transformation.

That’s the story. That’s the opportunity. That’s where we’re focused.

Click here to explore the AI investments we’re tracking right now.

Sincerely,

P.S. Questions or comments about this issue? Drop us a line at langofeedback@investorplace.com.

PCE inflation comes in soft – will it prompt a rate cut? … Trump jabs at China … don’t poke the bear … an entry point for going long gold … not enough industrial workers

Inflation barely moved in April despite President Trump’s tariffs.

This morning, we learned that the Personal Consumption Expenditures (PCE) Price Index climbed just 0.1% on the month, putting the yearly rate at 2.1%. The forecasts were for 0.1% and 2.2%, respectively.

Core PCE inflation, which strips out volatile food and energy prices, and is the Fed’s favorite inflation gauge, climbed 0.1% on the month and 2.5% on the year. Expectations were for growth of 0.1% and 2.6%.

While these are good numbers, the unpredictability of trade policy suggests we shouldn’t be too quick to assume they’ll prompt the Fed to action. Yesterday, Chair Powell met with President Trump. According to the Fed’s official statement on the meeting:

Chair Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook.

Despite this hedging, the CME Group’s FedWatch Tool now shows that traders are putting the heaviest odds (39.9%) on two quarter-point cuts by the December FOMC meeting. And the probability of at least one quarter-point cut in September now clocks in at 70%.

Bottom line: It was a good PCE report. But it’s unclear if it will be enough for the Fed to start cutting. We’ll be tracking this with you.

As we were going to press yesterday, we got another twist in the trade war

A federal appeals court agreed to temporarily halt the U.S. Court of International Trade’s ruling from Wednesday that blocked President Trump’s tariffs.

As we covered in yesterday’s Digest, Wednesday’s ruling struck down the tariffs, saying the President lacked the authority under the International Emergency Economic Powers Act of 1977 (IEEPA) to impose his “Liberation Day” levies.

The delay gives the Trump administration time to build its case for suspending the trade court’s decision during the appeal.

Here’s more from CNBC:

Trump officials maintain that they have other options for imposing tariffs, even if they do not prevail in the case.

“Even if we lose, we will do it another way,” Trump trade advisor Peter Navarro told reporters at the White House on Thursday afternoon.

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Wall Street – mostly the media – should tread carefully

In yesterday’s Digest, we explained why the trade war may be winding down – even without need for court intervention. But we need to be careful…

In the last 48 hours, the financial press has been relentless with its use of the Wall Street acronym “TACO,” short for Trump Always Chickens Out on tariffs.

As we noted yesterday, this moniker reflects the belief that Trump ultimately backs off from aggressive tariff policy. The President hates the term, calling it “nasty” and telling a reporter asking about the topic, “Don’t ever say what you said.”

If the goal is to see the President soften his stance, branding him as weak on trade is not the wisest strategy – a vicious backfiring could be the unintended consequence.

On that note, this morning, President Trump came out swinging against China, claiming it “totally violated” its preliminary trade agreement with the U.S.

From Trump on Truth Social:

The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US.

So much for being Mr. NICE GUY!

It’s not clear what no more “Mr. Nice Guy” will mean for tariff policy, but it certainly leans toward tariffs ratcheting up, not down. How much of this is a reaction to TACO?

History buffs will recall the lead-up to World War I, when nations rushed into conflict not just out of obligation, but to preserve prestige and avoid appearing weak. What began as a regional dispute spiraled into global war because leaders felt they couldn’t back down without losing face.

A trade war is hardly a world war, but the underlying dynamic – escalation driven by the need to project strength – remains relevant.

Poking a bear is rarely a wise decision.

As it stands now, Treasury Secretary Scott Bessent admitted that trade talks with China “are a bit stalled.” But he went on to say that there will be additional talks over the next few weeks.

We’ll keep you updated.

If you’ve been looking for a buying opportunity in gold, today’s set-up is looking increasingly attractive

As you can see below, since setting a new all-time high in recent weeks, the yellow metal has been moving sideways/lower.

Behind the breather has been renewed investor optimism about stocks, fueled by perceived progress in trade and tariff negotiations.

As market anxieties have eased (whether justified or not), investors have felt more confident rotating out of the “safe haven” of gold, and back into riskier stocks.

Now, if you’re a shorter-term trader, this makes sense. But for longer-term investors, remember: Even if we get beyond trade war chaos, a federal spending/debt crisis still looms.

Another 3.8 trillion reasons to own gold

President Trump’s “One Big Beautiful Bill Act” is currently making its way through Congress, and it’s a cannonball into the “big government” pool. The Congressional Budget Office estimates it could increase the deficit by about $3.8 trillion over the next ten years.

Of course, it’s just the latest in a long history of spending/debt bonanzas from our government that’s speeding our nation toward an eventual reckoning.

For perspective on this, let’s go to Tom Yeung, Eric Fry’s lead analyst in Fry’s Investment Report.

From Tom’s Weekly Update:

America’s government has a spending problem.

In 2024, the federal government spent $6.8 trillion while collecting just $4.9 trillion in tax revenues – or $1.39 for every dollar collected.

The latest tax bill, coming out of a Republican-led Congress, will widen that figure to roughly $1.42…

America itself is on an unstainable fiscal path. Borrowing 39 cents to fund every dollar spent is bananas, to use a highly technical term.

Forty-two cents is even wilder. And if something is unsustainable, it someday must stop. 

It will stop – the question is “how?”

Will it stop due to painful and prolonged austerity measures from politicians, loathed by millions of Americans because it means a reduction (or elimination) of various benefits and programs they rely on?

Not a chance. The masses will vote out any politician who dares touch their entitlements.

My money is on an eventual rebellion by the markets and our government’s creditors that finally explodes the $36.9 trillion debt bomb lodged beneath the foundation of our economy.

Either way, you’re going to want to own gold.

Tom notes “bullion has typically outperformed during economic stress, and miners can do even better thanks to operating leverage and solid management.”

For a specific miner to consider, check out Westgold Resources (WGXRF). Tom and Eric recommended it to their Investment Reportsubscribers in January.

They’re now sitting on 54% returns. But far greater gains are likely on the way as our government goes full “Thelma and Louise” over the fiscal cliff.

Beyond gold, recognize how our government’s financial challenges point toward one investment sector

Let’s put some of the biggest pieces on the board.

We have…

The national debt, barreling toward $40 trillion… Federal interest payments climbing so fast they rival the cost of our entire defense budget… Trump’s “big, beautiful bill” which tacks on another few trillion to our debt … Trump’s massive push for domestic industrial revival… a big demographic slowdown… and a labor shortage.

That last one might take you by surprise.

A labor shortage? Aren’t we at greater risk of a recession and losing jobs?

Not for our industrial base.

Let’s go to NPR from earlier this month:

Last year, the Manufacturing Institute, a nonprofit aimed at developing America’s manufacturing workforce, and Deloitte, a consultancy firm, surveyed more than 200 manufacturing companies. More than 65% of the firms said recruiting and retaining workers was their No. 1 business challenge.

Part of the story has been a tight labor market. There have been similar worker recruitment and retention issues in other sectors, like construction and transportation.

But the shortfall of manufacturing workers is about more than just that — and with both major political parties pushing to reshore manufacturing, analysts expect the industry’s workforce issues to get even more challenging…

The average manufacturing worker is also relatively old, and the industry expects a tidal wave of retirements in the coming decade.

The Manufacturing Institute and Deloitte projected that the industry will need 3.8 million additional workers by 2033 and that as many as “1.9 million of these jobs could go unfilled if workforce challenges are not addressed.”

These estimates, mind you, were calculated before Trump’s recent tariffs, which, at least theoretically, are supposed to compel even more manufacturers to build factories in America.

If things go to plan, we may need even more Americans to start working in manufacturing in the coming years.

These labor shortages aren’t just a hiccup – they’re a structural reality.

The U.S. workforce is aging. Birth rates are falling. And the younger generations aren’t exactly lining up for repetitive manual labor in manufacturing hubs.

So, if we’re bringing back the factory floor, it means one thing…

Rise of robotics/AI/humanoids.

This isn’t science fiction anymore

Tesla, Nvidia, Amazon, and the rest of the “Mag 7” aren’t experimenting with robots, they’re betting the future of their companies on them.

Look at Tesla’s Optimus project. Watch Amazon’s warehouse bots replacing human pickers. Check Nvidia’s pivot from gaming chips to powering every AI model and robot brain on the planet.

It’s all converging at once:

• A labor crisis
• Exploding federal deficits
• A geopolitical tech race with China
• Corporate America going all-in on automation
• And an AI boom unlike anything we’ve ever seen

We need productivity like never before – fast, scalable, exponential productivity.

Our politicians can’t (or won’t) “cut” our way out of our financial mess. Instead, we’ll have to grow our way out. More productivity is a must to offset our soaring government expenses.

But that growth won’t come from humans anymore. It will come from bots. Machines that don’t sleep, unionize, or clock out. Machines that can redline our nation’s GDP without adding to payrolls or pension plans.

Bottom line: Yes, we’re about to have an industrial revolution, but not with steam or steel. This time, it’ll be a revolution of silicon, sensors, and software.

I’m going to continue beating this horse long past death: Please get your portfolio ready for what’s barreling toward us.

On that note, if you missed legendary investor Louis Navellier in his “Liberation Day 2.0” presentation on Wednesday…

He addressed how he’s playing this tech boom.

“Liberation Day 2.0” is Louis’ name for a series of new moves from President Trump with radical implications for taxes, domestic energy, and technology.

In the free replay of Wednesday’s event, which you can access here, Louis will tell you how to position yourself in response to today’s rapid acceleration of technological advancements (as well as President Trump’s tax and energy policies).

According to Louis, Trump’s $10 trillion economic blueprint could unleash a tidal wave of capital – a fantastic opportunity for investors who get ahead of it.

We’ll keep you updated on all these stories here in the Digest.

Have a good evening,

Jeff Remsburg