Does anyone still give a damn about tariffs? That's essentially what one reader asked me last week. The question struck a nerve—equal parts cynical eye-roll and legitimate economic insight.
After years of tariff threats, implementations, retaliations, and breathless headlines, we've entered what I'd call the "whatever" phase of trade war consciousness. And honestly? It's fascinating.
The answer to whether tariffs still matter is yes... but it's complicated.
Remember 2018? A single presidential tweet about Chinese tariffs would send markets into absolute conniptions. Traders would scramble, analysts would hyperventilate, and the S&P would dive like it had spotted something shiny on the ocean floor. These days? The White House floats the possibility of slapping 60% tariffs on $300 billion of Chinese imports, and the market response is basically, "Huh, interesting. Anyway..."
This isn't investors being stupid (well, not entirely). It's adaptation. The market has already digested a world where global trade isn't what it used to be. Companies have spent the last several years playing an exhausting game of supply chain Tetris—shifting production, finding creative "country of origin" workarounds, and generally figuring out how to function in this new reality.
The initial shock has worn off. The extraordinary has become... Tuesday.
Look, I've been covering trade policy since well before it became a political football, and I've noticed that tariff impacts come in three distinct flavors:
First, there's the immediate price hit—somebody's gotta pay that tax. Either companies eat it (bye-bye, profit margins) or consumers do (hello, inflation).
Second comes the great corporate reshuffling—the frantic rerouting of production and sourcing to minimize exposure. It's inefficient and expensive, but companies manage.
The third impact is the trickiest: relationship damage. It's the long, slow deterioration of trade partnerships, the creeping uncertainty, the subtle ways commerce gets just a little bit harder. This is the stuff that doesn't make headlines but gradually saps economic vitality.
Markets have mostly processed the first two. It's the third that keeps economists up at night (along with their usual existential dread).
I spoke with a supply chain director at a major retailer last month who described the current situation as "normalized chaos." They've built elaborate systems just to track which products need to take which bizarre geographic detours to avoid which specific tariffs. Products that once shipped directly from China to American stores now vacation briefly in Vietnam or Mexico—getting just enough local content or processing to earn a new passport stamp and dodge tariff bullets.
It's all tremendously stupid and inefficient. But it's the new normal.
And that's precisely why markets yawn. They've priced in a certain level of trade friction. They've witnessed companies adapt. They've incorporated this reality into their models.
(Side note: Isn't it amazing how quickly "unprecedented economic disruption" becomes "just another variable in the spreadsheet"? Markets are nothing if not adaptable.)
This doesn't mean future tariff announcements won't move markets at all—they will, especially if they're dramatically worse than expected. But the magnitude will likely be smaller. The panic phase has passed.
There's a warning here, though. While direct market reactions have diminished, tariffs' influence on inflation remains potent. And in our current environment, where the Fed scrutinizes every tenth of a percentage point in price data? That indirect effect could still pack a punch through interest rate decisions.
So circling back to my reader's question... yes, tariffs still matter. But we're no longer in the acute phase where each announcement triggers market whiplash. We've entered the chronic phase—a steady, persistent drag on growth and efficiency that shows up not in dramatic crashes but in the numbers economists will puzzle over for decades: slightly lower productivity growth, persistently higher inflation, and the thousand small inefficiencies of a fragmented global economy.
The market's shoulder shrug isn't ignorance. It's partly adaptation.
And partly exhaustion.
