The U.S. stock market experienced significant fluctuations in the first half of the year, currently up over 5% despite concerns over tariffs. The effectiveness of President Trump's tariff policies is in question, with potential impacts on inflation and corporate profits. Effective tariffs have climbed to 13%, prompting questions about future corporate earnings, which are expected to rise. Market expectations regarding Federal Reserve rate cuts are also influenced by tariff-related inflation, as pressure mounts for the Fed to respond amid political considerations.
The U.S. stock market completed a roller-coaster first half of the year at record-high levels, but a host of factors could knock equities off their perch over the rest of 2025.
The benchmark S&P 500 is up over 5% on the year so far, rebounding from an April plunge after an economic scare stemming from President Donald Trump's "Liberation Day" tariff plan.
Even if some of the harshest levies are rolled back, higher effective tariffs this year still could drive up inflation and cut into company profits and consumer spending.
Fed Chair Jerome Powell has pointed to concerns that tariffs will push up inflation as a reason for the central bank to hold off on interest rate cuts.
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