Good morning. A federal appeals court ruled on Aug. 29 that most of the Trump administration’s tariffs on global trading partners are illegal. That means yet another uptick in tariff uncertainty for businesses.
“While the court’s decision introduces fresh uncertainty, tariffs are likely to remain in place for at least a month until a final ruling—which itself is highly uncertain,” Gregory Daco, EY-Parthenon chief economist, told me.
The court’s ruling wouldn’t take effect until Oct. 14, and the Trump administration is expected to appeal the case to the U.S. Supreme Court, which may hear arguments this year or in 2026. On Tuesday, President Trump said he will ask the Court for an “expedited ruling” to overturn the appeals court decision.
Daco said this ambiguity reinforces the importance of a “tariff tower watch” approach: monitoring legal and policy developments closely while planning across multiple horizons.
In the near term, CFOs should align pricing strategies, revisit supplier terms, and model out cost scenarios, he said. More generally, he advises medium-term contingency planning that spans logistics, margin pressure, inventory management, and customer pass-through dynamics. EY research and industry reports recommend CFOs prioritize disruptive technology and data in scenario planning to strengthen resilience and decision-making.
I asked Daco about the potential short- and long-term economic consequences for industries that had adjusted to the existing tariffs. Removing tariffs would be economically stimulative—lowering input costs, lifting margins, and potentially accelerating investment, he said.
“But the reality is that any reprieve may prove fleeting,” he explained. The administration retains broad authority to reimpose tariffs through other legal frameworks, such as Section 232 or 301 of U.S. trade law, and “the broader shift toward strategic protectionism is likely to persist,” Daco said.
The impacts of tariffs continue to be top of mind for CEOs and CFOs. Since June 15, there have been 346 earnings calls conducted by S&P 500 companies in which the terms “tariff” or “tariffs” were cited at least once on the call, John Butters, VP and senior earnings analyst at FactSet, told me.
Daco’s biggest piece of advice for finance chiefs: “Plan for turbulence, not just outcomes.”
He recommends that CFOs lean into scenario planning that integrates legal risk, trade exposure, and geopolitical volatility. Build resilience across your supply chain, ensure pricing strategies can flex with cost volatility, and maintain optionality in procurement and production, he said.
“In an environment where the policy goalposts are moving, agility is not a luxury—it’s a necessity,” Daco said.
Now, that’s for certain.
Sheryl Estrada
sheryl.estrada@fortune.com
Leaderboard
Big Deal
According to Mercer’s latest 2025 U.S. Compensation Planning Survey companies plan to increase their compensation budgets in 2026 by 3.1% for merit increases and 3.5% for total salary increases for non-unionized employees.
These projections are similar to 2025, when U.S. employers delivered actual merit and total salary increases of 3.2% and 3.5%, respectively. The survey also found that 20% of U.S. companies expect ongoing economic uncertainty to significantly impact compensation decisions in 2026.
Compensation projections vary by industry. For example, banking/financial services and life sciences expect above-average total increase budgets of 3.7%.
Employers also plan to promote approximately 8.1% of their workforce in 2026, down from 9.9% in 2025. The most common approach—used by 43% of employers—is to promote “as needed,” while 26% report having two promotion cycles per year.
Going deeper
From the report: “A federal judge ruled that Google can no longer enter into exclusive distribution deals to make its search engine or its Gemini AI technology the default option on phones and other devices and said Google must share some of its search data with competitors, but said he would not force the $2.6 trillion company to spin off key assets like its Chrome web browser. The ruling in the Department of Justice’s landmark antitrust case against Google-parent Alphabet stopped short of what could have been the government’s most severe action in decades to curb the power of a monopoly.” You can read the complete report here.
Overheard
“80% of Tesla’s value will be Optimus.”
—Tesla CEO Elon Musk said in an X post on Monday that the company’s value would eventually come from its autonomous Optimus bots, Fortune reported. On the same day, Tesla also released its “Master Plan, Part IV,” which places increased emphasis on physical AI.