On Friday, the tariff saga escalated. Treasury Secretary Scott Bessent warned that striking down Trump’s global tariffs would cause a “dangerous diplomatic embarrassment,” undoing months of trade negotiations. He and other cabinet officials urged the appeals court to delay any ruling until the Supreme Court weighs in.

The timing is critical. Just days earlier, Bessent said tariff revenues could top $500B annually, possibly near $1T, making them the key offset to Trump’s tax cuts. The CBO estimated tariffs could shrink deficits by $4T over ten years, plugging the $3.4T hole created by the tax bill. If the courts invalidate the tariff regime, that revenue disappears — and the fiscal framework for Trump’s “tariffs + tax relief” strategy collapses.

The announcement landed just after futures closed Friday, leaving markets to stew over the weekend. The implications are twofold: deficits would widen further and Washington would lose the fiscal space to fund industrial policy or sustain tax relief. Layered on top is the risk of a government shutdown on September 30, as Trump’s use of a “pocket rescission” to cancel $5B in foreign aid has already triggered a new budget standoff with Congress.