A majority of Americans — regardless of party affiliation — have made it crystal clear in poll after poll: They’re not on board with President Donald Trump’s tariff-heavy agenda. It’s also an open question as to whether the president is legally able to impose the levies. But none of that has stopped him. Instead, he’s preparing to roll out a slew of higher tariffs this week and has made fresh threats that more are still to come.

That’s even as inflation has reaccelerated and could get even hotter as businesses warn of more price increases. The US labor market is also sputtering under the weight of tariffs, with employers hesitating to take on more workers amid heightened economic uncertainty.

At the same time, stocks are near all-time highs; and mortgage rates, after months of barely budging, are finally starting to move lower. That’s just the validation Trump needs to stand his ground on tariffs despite their dwindling popularity.

White House spokesman Kush Desai told CNN: “For decades, politicians railed against how foreign cheating and lopsided ‘free’ trade deals were destroying American manufacturing. President Trump is the first president in modern history to actually step up and stop the carnage.”

But stocks are up and mortgage rates are down for mainly the same reason: The Federal Reserve started cutting rates this month and is expected to continue doing so at upcoming meetings. Investors prefer lower rates because it can often mean companies borrow more cheaply, which helps cut their expenses and makes it easier to turn a profit.

Mortgage rates tend to move in tandem with yields on longer-dated government-issued debt, and if investors expect more rate cuts in the future, those yields often fall.

But here’s the kicker: The Fed cut rates because the labor market has weakened so much over the past few months, prompting fears of a more significant economic downturn. Aiming to reinvigorate the economy, Fed officials opted for a quarter-point cut and are penciling in several more this year and next, after holding steady for nine straight months.

Despite casting doubt on the government’s data reporting process, the Trump administration embraced last week’s revised second-quarter gross domestic product data, showing the economy grew at an annualized rate of 3.8%. That’s significantly higher than the 3.3% estimate the Commerce Department previously reported.

The revision came primarily due to consumer spending that was stronger than previously known. That spending hinges on a robust labor market, though, because if fewer people are working that means they have less income to spend.

For the time being, the unemployment rate remains at historically low levels. It’s both a reflection of employers’ reluctance to expand their workforces and to lay off already-hired workers.

Economists largely believed that markets would be a guardrail for Trump’s tariffs. That ended up being the case right after so-called “Liberation Day,” when Trump initially unveiled higher tariffs on practically everything the United States imports. Bond yields began to spike as stocks cratered. Or, as Trump later described it, people were “getting yippy.”

All that yippyness, he said, caused him to reverse course on his tariff rollout, instead opting for a 90-day pause on “reciprocal” tariffs, which he later extended again to August.

In explaining his April decision, Trump told reporters he had been closely watching the bond market turmoil. “The bond market is very tricky, I was watching it,” he said. “The bond market right now is beautiful. But yeah, I saw last night where people were getting a little queasy.”

Now, as Trump continues to try and implement new tariffs, investors are partly focused elsewhere. S​tocks have climbed higher in recent months on better-than-expected corporate earnings, optimism about a potential AI boom and hopes that the Fed will cut rates.

The S&P 500 has rallied 33% since early April, when the index was on the precipice of a bear market amid initial concern about Trump’s tariffs. The benchmark index has gained 13% since January 1 and has notched 28 record highs this year.

Trump’s ability to continue piling on tariffs unchecked could soon come to an end, with the Supreme Court scheduled to hear arguments in a landmark tariff case in November. The case considers whether Trump has the legal authority to levy tariffs on countries’ goods, citing emergency economic powers, the justification he’s used for the majority of the tariffs he’s imposed in his second term.

If the court sides with lower courts’ verdicts, finding that Trump lacked such authority, the federal government could have to refund around $80 billion worth of tariff payments businesses made this year.

That, by no means, would prevent Trump from pushing higher import taxes out. Rather, the administration could use a plethora of other levers to accomplish its ambitious foreign policy goals.

CNN’s John Towfighi contributed reporting.

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