The Major Markets saw red coming off the long holiday weekend. However, despite the fact that there were losses in all five indices, at least for the S&P 500, the pullback could be attributed to just Friday’s activity. The third of a percentage point loss on Friday was just enough to take the week back below Thursday’s close ahead of the Independence Day holiday weekend.

In the midst of last week’s activity, the S&P 500 still managed to log a fresh all-time closing high at 6280.46. This shows that even when the headline might initially look negative, there may be some additional positive news in the background.

However, what was in the forefront last week was Tariffs, once again. President Trump announced that he would be sending out a string of letters to countries that have been slow to negotiate a plan for the alleged imbalances in tariffs and trade that was first highlighted during the April 2nd “Liberation Day” rose garden press conference.

Fed Chairman Jerome Powell highlighted the potential impact of the Trump Administration’s tariff policy in the last FOMC Meeting. During the June meeting, Powell said:

“Changes to trade, immigration, fiscal, and regulatory policies continue to evolve, and their effects on the economy remain uncertain.  The effects of tariffs will depend, among other things, on their ultimate level.  Expectations of that level, and thus of the related economic effects, reached a peak in April and have since declined.  Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity.”

However, aside from the initial influx of foreign imports ahead of the implementation of the “Liberation Day” tariffs, the market hasn’t seen much in the way of negative price change from foreign suppliers.

As the Bipartisan Policy Center highlights on their Tariff Tracker Page, the economic dynamics around tariffs ultimately remain tricky to tie down.  In April and May, tariff revenue as a percentage of total imports surged from around the mid-2% percentage point range to 5.7% and 8.1% respectively.  That said, total overall tariff revenue as a percentage of GDP has historically only been a fraction of a percentage point . We’ll see how this impacts GDP in the Q2 release later this month.