The S&P 500 faced a steep drop of 21% in the first half of 2022, primarily due to inflation, which hit 8% amid geopolitical turmoil and economic policies. Anticipation of renewed inflation triggers, particularly potential tariffs on imports, raises fears of another significant downturn. Economic forecasts indicate that tariffs could increase household costs dramatically, and this has led to a bearish outlook among investors. As the market has rebounded to new heights, the possibility of an impending correction looms, particularly if tariffs announced by the White House are substantial.
Inflation is the most likely reason for the S&P 500's significant drop this year.
A 10% tariff on all imports and a 60% tariff on goods imported from China would raise Americans' average household costs by $1,560.
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