Tariff refunds: When the Supreme Court ruled in February that the administration’s IEEPA tariffs were unlawfully imposed, it set off one of the more unusual corporate windfalls in recent memory. Thus far approximately $106.6 billion of the $166 billion owed has been paid out. The numbers at the retail level are staggering. Walmart received approximately $2.9 billion; Target – $994 million; Home Depot – $730 million; TJX – $331 million. Walmart confirmed on the company’s Q2 earnings call that its funds are being directed toward price reductions for consumers, while several other retailers used the windfall to shore up profit margins instead. One group conspicuously absent from the refund line? The consumers who spent the past year paying higher prices because of the tariffs in the first place.
In our view, tariffs are taxes. They are levied on importers, passed to businesses, and ultimately paid by the person standing at the checkout counter. Free trade is a foundational principle on how market economies create prosperity, and the justifications offered for this particular trade war were always thin. The courts agreed with what economists had argued from the start. The refunds are a welcome correction, but they do not reimburse the households that bore the cost.
Fed Chairman Warsh: The annual gathering of central bankers and economists in Jackson Hole, Wyoming, has a way of moving markets. Federal Reserve Chairman Kevin Warsh used the occasion to deliver a message investors were not hoping to hear: inflation is still too high, and the Fed is not done fighting it. In Warsh’s words, “the Fed’s predominant focus right now should be on prices.”
The market’s response was swift. Heading into the speech, traders had priced a September rate hike at roughly one-in-three odds. By the time Warsh left the podium, that probability had flipped to better than even. Warsh also used the platform to reinforce his preference for what he called a “quieter Fed”, one that offers less forward guidance and fewer public signals about the path of rates. That posture is a deliberate departure from the Powell era and is still something markets are learning to navigate.
Chairman Warsh inherited a difficult hand. He arrived with tariff-driven inflation already baked in, an energy market digesting the Iran-driven supply disruption, and a labor market that, while stable, offers little cover for easing. The prospect of rate cuts this year is gone, while a hike is now genuinely possible. If you carry variable-rate debt or have a significant financial decision on the horizon, the math has changed.
AI keeps the global economy together: In July, new IMF projections offered a surprisingly clear-eyed view of where the global economy stands (and why it isn’t doing worse). The U.S.-led AI investment boom is providing a material offset to the twin drags of trade disruption and the Iran energy shock. The IMF now expects the global economy to grow at roughly a 3% pace this year, a step down from 3.5% in 2025. While it is a slowdown, it’s a far cry from the recession scenarios that seemed plausible when oil spiked in March.
The underlying dynamic is “a tug of war”, with AI-driven demand on one side and the Middle East energy shock on the other. For now, those forces are roughly canceling each other out, although the AI buildout is not without its own inflationary side effects. Data center construction and memory chip demand are driving up costs in the near term.
The debate over whether the capital outlays flowing into AI will ultimately generate sufficient returns is real. Our perspective is that businesses are genuinely just beginning to integrate this technology, and the productivity gains that will follow are not yet fully visible in the data, which is why the investment case remains compelling.
Disclaimer: The information above is for general educational purposes only and should not be considered financial, tax, or legal advice. Always consult with a qualified professional regarding your specific situation. You should consult with your CPA and/or attorney before implementing any estate planning, gifting, or tax-related strategy.