For businesses and consumers bracing for a relentless era of global trade wars, Morgan Stanley is offering a striking reality check: Peak tariffs have likely already come and gone.
The bank’s global economic briefing on Monday, the latest in a series of “tariff diaries” by senior economists including Rajeev Sibal and Michael Gapen, found President Donald Trump is very unlikely to draw any greater revenue from tariffs than he already has, following the recent Supreme Court ruling striking down the administration’s use of the International Emergency Economic Powers Act (IEEPA). Although it didn’t cite Treasury Secretary Scott Bessent by name, the note lent credence to his description, before the Supreme Court ruling, of tariffs as a “shrinking ice cube.”
While Trump quickly pivoted to Section 122 of the Trade Act of 1974 as a stopgap measure, Morgan Stanley economists argued any new trade framework will be legally vulnerable and mathematically weaker, and a return to last year’s aggressive “Liberation Day” tariff levels would be “quite complicated.”