The US stock market continues to hit records despite tariff threats from President Trump. Duties paid by US importers have spiked to over 13%, potentially slashing 5% or more from corporate earnings growth. Concerns exist over the S&P 500’s high valuation and potential for a market downturn.

Even bullish investors like Morgan Stanley’s Mike Wilson are preparing for turbulence as tariffs impact companies. Companies like General Mills and Fedex are already feeling the effects. Wall Street awaits earnings reports from companies like General Motors and Capital One to gauge the impact of tariffs on the economy.

Tariffs are expected to shrink the US economy by 1.6% over the next few years, with consumer prices rising. Inflation could hinder hopes for interest rate cuts. While some see reasons for pricey stock levels, others warn of the unpredictable nature of Trump’s tariff policies and the potential for increased tariffs on countries like Indonesia and Vietnam.

Despite potential challenges, the tax and spending bill signed by Trump could boost S&P 500 earnings growth by 5-7%. While some believe the market can weather the storm, others warn that inflation could impact disposable income and trigger market unrest. The impact of tariffs remains uncertain as Trump’s August 1 deadline looms.

Read more at Yahoo Finance: Tariffs Loom Over Richly Valued Stocks