The Market Finds Itself in Tariff Limbo

The market finds itself in a state of ‘tariff limbo’ this week, following a Supreme Court ruling that struck down tariffs imposed under the IEEPA, raising more questions than answers about how Trump’s tariff strategy will unfold in 2026. While the court invalidated broad emergency tariffs, sector-specific duties (such as those on metals under Section 232) remain intact. Trump has responded by threatening a 10% global tariff baseline, with potential escalation to 15% for non-compliant nations, leaving existing trade deals from 2025 and the possibility of tariff rebates up in the air. Markets are left guessing whether countries with higher agreed rates will see relief or face new pressure — and whether any illegally collected revenues will need to be refunded.

So, with the fate of prior agreements and potential refunds unresolved, markets are lacking upside conviction this week. Throw in growing uncertainty about whether accelerating AI adoption will be a net positive for society and the economy — given the vulnerability of white-collar jobs — and it becomes apparent that risk assets are facing a few speed bumps. In FX, the Dollar has pushed higher, notably against the yen, as questions swirl about how the BOJ can raise rates while the Takaichi government pursues fiscal expansion. This has allowed the DXY to climb back to around 97.80 after dipping to 97.33 post-ruling.

Renewed tariff uncertainty has given precious metals a boost, with traders turning to gold and silver as a safe-haven play. Gold has ascended ~5% over the past five days, driven by tariff irresolution and geopolitical risks, with the US appearing ready to conduct military strikes against Iran. US-Iran talks are set for Thursday in Geneva — progress toward a nuclear agreement could ease safe-haven demand and pressure gold, but a breakdown or imminent military action could send it marching higher again. Levels to watch include support at $5086 and $5023, with resistance around $5250 standing between gold and a potential run toward $5300–$5400. While gold no longer looks quite as bullet-proof as it once did, it still stands to benefit from the prevailing tariff and geopolitical winds that can hinder other assets, even as the dollar’s stubborn strength limits further gains.

Oil is another asset whose fortunes are closely tied to the US-Iran talks. Prices are arguably carrying a geopolitical risk premium due to potential supply disruptions if the US engages militarily. Absent this tension, crude would likely be trading lower given the projected 2026 excess supply picture. Positive developments in Geneva this week would put downward pressure on oil, while any further breakdown could see prices track higher from current levels.