Tariffs, Tech Troubles and the Return of $100 Oil

David Halseth
22 hours ago
2 min read

For the week ended 7/25/26.

Well, that tariff respite was enjoyable while it lasted.

After peaking near 30% in April 2025, the average U.S. tariff rate had retreated to roughly 10.7% by the end of this year’s second quarter. Markets could finally breathe again – or so they thought.

When the Supreme Court struck down the administration’s primary tariff authority in February, many assumed the trade war would become less capricious and more constrained. President Trump apparently viewed the ruling as a road map, not a roadblock.

Over the past two weeks, the administration has announced tariffs of 25% on certain Brazilian imports, 50% on select Canadian goods and 10% to 12.5% across roughly 60 trading partners. The Canadian tariffs rely on Section 338 of the Tariff Act of 1930 – a nearly century-old provision that has never previously been used. There is also talk of tariffs reaching 200% on generic drugs.

Geez, what could possibly go wrong?

Markets offered a preview last week. The Nasdaq Composite fell 2.1%, while the S&P 500 lost 0.6%, giving both indexes their first consecutive weekly declines since March. SpaceX dropped another 7.2% and is now more than 40% below the high reached shortly after its June IPO – erasing over $1 trillion in market value.

The larger concern is the enormous amount of money being poured into artificial intelligence. Alphabet and Tesla both reported negative free cash flow as spending on AI, autonomous vehicles and robotics surged. Analysts expect Amazon and Meta to follow, leaving Microsoft as the only major AI spender still producing positive free cash flow.

And the hyperscalers are only beginning to supplement shrinking cash flow with massive bond issuance. That means more supply hitting a bond market already wrestling with inflation, federal deficits and higher-for-longer interest rates. Speaking of bonds, the Bloomberg U.S. Aggregate Bond Index fell 0.7% last week and is now down 0.6% year to date.

What have I been saying about bonds?

Commodities, meanwhile, jumped 2.8% as Middle East fighting pushed oil above $100 per barrel. The asset class is now up 25.6% this year and 34.5% over the past 12 months. Wow indeed.

This week brings Consumer Confidence Tuesday, the FOMC decision Wednesday and the initial second-quarter GDP estimate Thursday.

Buckle up. The “quiet” part of summer appears officially over.