The Stock Market Flashes a Warning as President Trump Announces New Tariffs. History Says the S&P 500 Will Do This Next.

Economic Overview - The S&P 500 has traded sideways this year, while the iShares MSCI ACWI ex US ETF has advanced about 10%, indicating a significant divergence in performance between U.S. stocks and global markets [1] - High valuations and concerns regarding President Trump's policies have led to a decrease in investor interest in U.S. stocks [1] Tariff Policy Changes - President Trump has replaced the now-illegal IEEPA tariffs with similar Section 122 tariffs, which were initially set at 10% and later increased to 15% [5][6] - The Supreme Court ruled against the IEEPA tariffs, stating that the president exceeded his authority, prompting the quick implementation of Section 122 tariffs [6] Economic Impact of Tariffs - Studies from various institutions indicate that U.S. businesses and consumers have borne approximately 90% of the costs associated with President Trump's tariffs [8] - The Congressional Budget Office (CBO) suggests that the tariffs have resulted in a lower GDP than would have occurred without them, as tariff revenue diverts funds that could have supported economic growth [9] Employment and Growth Data - In 2025, the U.S. economy added only 181,000 jobs, marking the lowest increase since 2009, excluding the pandemic [10] - Economic growth was recorded at just 2.2% in 2025, the slowest rate in a decade, excluding pandemic effects [10] - PCE inflation reached 2.9% in December 2025, the highest level since March 2024, indicating rising price pressures [10]