Tariffs, Rome, and the Terrain of 2026

A merchant walks into a Roman port around 150 AD. His ship carries silk and spices from the eastern edge of the empire. Before he sells a single bolt of cloth, a tax collector takes his cut. 2% on standard goods. 5% on most imports. Up to 25% on luxury items from beyond the empire’s borders.

The merchant doesn’t love it. But he understands the deal. The empire needs roads. Roads need legions. Legions need funding. So the border gets taxed.

2,000 years later, the math is different. The logic is not.

At the beginning of this year, I wrote that forecasting is a terrible thing to do. Not because the future doesn’t matter, but because headlines distract us from incentives. And incentives are what actually move markets.

In that outlook, I focused on 3 forces: the silicon fault line, the AI capital cycle, and policy whiplash.

This recent tariff ruling sits squarely in the 3rd bucket.

I’m not interested in debating the legal reasoning. Markets will do what they always do. They will translate policy into cash flow math.

The Oldest Policy Lever

Long before income taxes existed, governments taxed trade. Rome’s port duties were practical, not philosophical. Armies needed funding. Border taxes were easy to collect.

But tariffs never just raised revenue. They changed behavior. Merchants rerouted trade. Smuggling increased. Consumers paid more.

The pattern is simple and durable. Tariffs generate revenue and protect specific interests. They also distort incentives.

That tradeoff hasn’t changed in 2,000 years.

America Was Built on This Stuff

In early U.S. history, tariffs weren’t a side policy. They were the policy. Before the Civil War, customs duties accounted for roughly 90% of federal revenue.

The Tariff of 1828 is a useful case study. It imposed duties averaging 50% on many imported goods. Northern manufacturers benefited from protection. Southern exporters faced higher costs and feared retaliation from abroad.

Same nation. Same law. Completely different outcomes.

This is the part that matters for anyone managing money. Tariffs don’t hit evenly. They redistribute. Redistribution changes margins. And margins drive the returns you actually see in your portfolio.

Scalpel Versus Sledgehammer

I don’t think tariffs are inherently bad.

Used narrowly and temporarily, they can create breathing room for a strategic objective. A country trying to build out a critical industry (semiconductors, for example) may have a legitimate case for targeted protection, especially when national security is part of the equation.

That’s the scalpel.

But blanket tariffs are the sledgehammer.

When tariffs apply broadly across supply chains, they function like friction across the entire system. Modern manufacturing is globally integrated. A 10% tariff on a component raises costs for every domestic producer who depends on that component. Some pass it on. Some absorb it. Some move production offshore, which is the opposite of what the policy intended.

Broad tariffs tend to increase consumer prices by 0.5% to 1.5%, compress corporate margins by 1 to 3 percentage points in affected sectors, and slow productivity growth over time. That doesn’t mean recession tomorrow. It means the engine runs a little less efficiently, quarter after quarter, until you notice it in the rearview mirror.

Why This Matters Right Now

In my 2026 outlook, I described policy whiplash as a central risk.

Tariffs, court rulings, and unexpected cash flow events don’t behave like normal economic variables. They arrive through legal decisions and political calculations. Markets struggle to price them because they’re discontinuous. You can’t draw a trendline through a Supreme Court ruling.

This latest ruling reinforces that theme in 2 ways.

First, it increases uncertainty around future trade policy. Every business making a capital allocation decision now has to factor in legal risk alongside economic risk. That’s a real cost, even if it never shows up in the CPI.

Second, it changes where cash lands. If prior tariffs are refunded, that’s a balance sheet story. If new tariffs are expanded, it’s a margin story. Either way, policy is no longer background noise. It is an active variable.

So What Do You Actually Do With This?

When someone sits across from me and asks whether tariffs are good or bad, I tell them that’s the wrong question.

The right question is: who just gained pricing power, and who just lost it?

After that, the framework fills itself in. How broad is the policy? How long will it last? Does it improve long-term productivity, or does it just shuffle profits from one pocket to another?

History is clear on this. Targeted tariffs tied to a real strategy tend to be manageable. Broad, persistent tariffs across complex supply chains tend to slow GDP growth by 0.3% to 0.7% annually. Not dramatic. But persistent.

That doesn’t mean markets collapse. It means the gap between winners and losers gets wider. Sector differences matter more. The index tells you less. The individual story tells you more.

The Terrain Ahead

In my outlook, I wrote that resilience matters more than prediction.

This ruling doesn’t change that view. It strengthens it.

When 90%+ of advanced chips come from 3 countries, AI financing is increasingly leveraged, and policy risk is legally concentrated, the system gets more sensitive to friction. 1 court ruling can move more capital than a full quarter of earnings reports.

Tariffs are ancient. Markets are resilient. But resilience is not the same as immunity.

Our job was never to guess the next headline. It’s to understand the terrain we’re standing on, manage risk with context, invest where productivity and pricing power can endure, and stay steady when the policy winds shift again.

Because they will. They always do. The merchant in that Roman port could have told you that.