Trump’s tariff plan is in disarray, and he pledges to inflict ‘absolutely terrible things’ on foreign countries ‘in a much more powerful and obnoxious way’.

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Yesterday, the S&P 500 dropped by 1.04% as the VIX “fear index” for volatility soared by 10%. However, this morning, futures were up 0.16%, indicating that traders might be taking a temporary break from the panic selling that has dominated the markets in the past 24 hours.

That panic stemmed from two sources, one real and one fictional:

  • The real source was the U.S. Supreme Court’s ruling that President Trump’s “Liberation Day” tariffs are illegal, which temporarily reduced the U.S. trade tariff rate to zero, along with Trump’s chaotic response to it. Trump immediately insisted that he would impose a global rate of 10%, then a few hours later said it would be 15%, and shortly after that, the White House stated it would be 10%, possibly followed by 15% at some point in the future. In the last 24 hours, in trade policy, which he believes he can enforce “in a much more powerful and obnoxious way.”
  • The fictional source was the , which envisioned a future in 2028 where AI eliminates so many jobs that it plunges the economy into a downward spiral. Software stocks declined by 3.82% yesterday, largely due to the fear, uncertainty, and doubt expressed in the note. “The declines included [down 13.15%] having its worst day since the 2000 tech bubble burst,” Jim Reid and his team at told clients this morning.

This morning, more level – headed individuals on Wall Street and in the City of London are pointing out that perhaps the stock markets shouldn’t be engaging in sell – offs based on a blog post that begins by denying it is “AI doomer fan – fiction.”

: “The stock market has reached a point where blog posts can cause significant stock price movements, or at least where people think they can…the Citrini commotion is further proof that we are in an overvalued market that is looking for an excuse to decline, for reasons that are probably broader than just AI.”

: “Nothing highlights the current sensitivity of stocks quite like what happened on Monday, when one of the factors contributing to the Dow’s 800 – point drop was a 7,000 – word hypothetical.”

Today, analysts are more focused on the rapidly changing and unpredictable tariff situation

The U.S.’s foreign trade partners are losing patience with the White House. Countries that thought they had low – level tariff agreements of around 10% may now face a 15% tariff. And countries that opposed the White House and ended up with higher tariffs may now only have to pay a 10% tax. “The perversity of what happened over the weekend was that those who got favorable deals, the allies, have been the most negatively affected,” Andy Haldane, the former central economist and current president of the British Chambers of Commerce, .

The CEO of Etihad Airways said this kind of uncertainty is .

Trump bombarded his trade partners with threats yesterday.

“Any country that wants to ‘play games’ with the ridiculous Supreme Court decision, especially those that have ‘ripped off’ the U.S.A. for years, and even decades, will face a much higher tariff, and worse,” he said in .

“The Supreme Court (I’ll be using lower – case letters for a while because I have absolutely no respect for it!) of the United States accidentally and unwittingly gave me, as President of the United States, far more powers and authority than I had before their ridiculous, stupid, and very internationally divisive ruling. For one thing, I can use licenses to do absolutely ‘terrible’ things to foreign countries…The court has also approved all other tariffs, of which there are many, and they can all be applied in a much more forceful and offensive way, with legal certainty, than the initially used tariffs,” , without providing legal evidence for his claims.

It’s unclear what basis Washington will use to impose new tariffs next, or whether those tariffs will withstand a legal challenge. one option could be under Section 122 of the trade act, which allows the president to impose tariffs of up to 15% in the event of “serious” balance – of – payments deficits or a significant currency depreciation. “Do the new tariffs meet the criteria? No matter how one examines the current situation—the state of the U.S. economy, its balance of payments, or its currency regime—none of these meet the standards outlined in Section 122,” he said.

Another option is Section 232 of the Trade Expansion Act of 1962, . But the administration would have to conduct investigations before imposing those tariffs.

And then there are Section 301 tariffs, which “have no upper limit, have proven to be very persistent once implemented (like those imposed on China in 2018), and could, in theory, be applied to any country that doesn’t agree to a trade agreement with the U.S. that includes higher tariffs.”

New tariffs will come at a cost to the economy and perhaps the stock market

All of the above, along with the uncertainty surrounding them, are likely to have a negative impact on trade, GDP, and, inevitably, the stock market.

Goldman Sachs analyst Pierfrancesco Mei estimated some figures this morning: “Tariff rates could increase further, or the proportion of costs borne by consumers could rise more than we expect. We estimate that an additional 5 percentage – point increase in the effective tariff rate would raise core PCE inflation by 0.5 percentage points compared to our baseline and reduce 2026 GDP growth by 0.4 percentage points, mainly due to its tax – like effect on consumers and businesses,” he told clients.

And if the markets are further spooked by remarks from the Oval Office or bearish sentiment towards AI, “A potential stock market correction could weigh on consumer spending and business confidence. We estimate that a 10% decline in equity prices sustained through the second quarter of 2026, for instance, would reduce 2026 GDP growth by about 0.5 percentage points compared to our baseline,” he wrote.

Here’s a snapshot of the markets this morning before the opening bell in New York:

  • S&P 500 futures were up 0.16% this morning. The index closed down 1.04% in its last trading session.
  • STOXX Europe 600 was down 0.14% in early trading.
  • The U.K.’s FTSE 100 was down 0.2% in early trading.
  • Japan’s Nikkei 225 was up 0.87%.
  • China’s CSI 300 is down 1.25%.
  • The South Korea KOSPI was up 2.11%.
  • India’s NIFTY 50 was down 1.12%.
  • Bitcoin dropped to $63K.