The S&P 500 started its second half of 2025 at historic market peaks yet experts predict upcoming market challenges will test its strength.
The index has gained more than 5% throughout the year after President Donald Trump introduced his “Liberation Day” tariff plan which triggered a major market decline in April. The July 9 deadline for new levies implementation remains a significant concern despite reduced worst-case trade war scenarios.
The effective U.S. tariff rate according to Goldman Sachs has risen to 13% since the beginning of the year when it stood at 3%. The upcoming tariff increase will create margin pressure while increasing inflation rates and possibly reducing consumer spending during the next few quarters.
Some investors believe that negotiations will reduce tensions but others predict that even limited tariff implementation will disrupt supply chains and damage earnings projections.
The market will focus on earnings reports to determine how businesses handle rising production expenses and changing market requirements. The sectors with high import dependence including retail and autos and manufacturing will receive the most intense market evaluation.
Analysts predict that political uncertainty together with global growth concerns will bring back market volatility during the second half of the year.
