The U.S. Supreme Court has finally weighed in on Trump’s tariff policy.

On Friday, the Court smacked down Trump’s sweeping tariffs that he issued in a series of executive orders last year.

The ruling immediately spawned hundreds of breathless headlines like the one below.

The mainstream media has framed it as perhaps the most important ruling of the century.

According to them, Trump’s tariffs were not just an abuse of power, but a threat to our very Republic.

And if the Court hadn’t shot them down, tariffs could have sent the economy into a full-blown depression like in the 1930s.

I won’t opine on the first subject. But I have long said that the second point is a load of BS.

With tariffs back in the headlines and Trump doubling down on his trade agenda, I want to offer some perspective on the matter.

What Have We Learned Since Last Time?

I’ve always said that Trump’s approach to tariffs is misunderstood. Here’s what I wrote around this time last year when he started floating the idea:

“The media has Trump’s ‘trade war’ all wrong.

One of the most perplexing aspects of this new administration and the media’s response to it is how surprised they are when Trump does what he said he was going to do.

This past weekend saw a tremendous amount of news around the threat of tariffs on our largest trading partners — Canada, Mexico, and China.

I purposely worded that as ‘the threat of’ because over and over, Trump has acted in a very predictable fashion.

He comes out firing with statements about massive changes he is going to make politically or economically.

Predictably, his political opponents, the media (aren’t they the same?) and members of his own party’s establishment quickly respond by predicting an oncoming apocalypse if he does what he just said he would do.

Every time, however, he then uses the ‘threat’ of his big changes to exact some sort of value in exchange for toning them down.

I will not judge the real value of what he gains in this situation, because I’m not sure he even cares very much — he just gets SOMETHING.

Then everyone who protested is left scratching their heads when it turns out we don’t have a disaster after all… and may even be better off than before.

This was happening in his first administration. And now that he knows a lot more about politics and doesn’t need to worry about reelection, it’s happening in this administration times ten.”

Well, this is exactly what happened.

Take a look at the chart below, which shows the average U.S. tariff rate going back to 1900.

Source: Economics Help

Prior to the Supreme Court’s ruling, we were at tariff rates last seen during the 1930s. That’s the bad news, if you can call it that.

The good news that nobody talks about is that it objectively doesn’t have that big of an impact on the economy.

In 2024, the U.S. imported approximately $4.1 trillion in goods and services, equal to about 13% of GDP.

The new effective tariff rate is approximately 17%. So that means an impact of about $700 billion in tariffs, or roughly 2.4% of GDP.

That’s not nothing. But according to most economists, it would have a one-time impact. And when you do the math, the reality of the impact is far less.

During the second half of 2025, the U.S. government collected $151 billion in customs duties. This compares to approximately $40 billion in the second half of 2024.

That means the total net impact of tariffs has been closer to $200–$250 billion, not $700 billion. This is less than 1% of GDP.

To put it into perspective, compare that number to the over $700 billion being spent on capital expenditure by the major hyperscalers in 2026.

Despite all of the angst about Trump’s tariffs, the reality is that they don’t matter all that much. A one-time impact of less than 1% is really not that important.

Second Verse, Same as the First

The Trump administration will now have to rework these tariffs after the ruling. They believe that they should be able impose similar rates.

This uncertainty about the future of tariffs has been played up for clicks thousands of times over the last few days.

Does it matter? Not. At. All.

Look at this chart of the S&P 500 since the start of 2025.

The stock market sold off last April when Trump shared his initial tariffs.

If those rates — which were closer to an average effective rate of 40% — were to happen, they would have had a huge impact on the U.S. economy.

Instead of 2.5% of GDP, it would have been closer to 10%.

That is a result that should negatively impact stocks, and it’s what the stock market priced in as a potential result.

Again, I never thought the original tariff rate was the end goal. It was just a negotiation tactic.

The actual result was far less dramatic and far less impactful on the economy and the markets.

Now that we have a year’s worth of information on Trump and his tariffs, I’m even more confident in my original conclusion…

Tune out the noise and focus on the fundamentals.