Wall Street is navigating choppy waters once again. With President Trump’s new wave of tariffs, rising inflation risks, and the war in Ukraine heating up, investors are shifting to cautious mode. Despite the S&P 500 recently hitting record highs, top analysts warn that the rally could stall. Add in growing pressure on the Federal Reserve (FED), and it’s clear the market is bracing for turbulence.

Let’s break down the key forces shaping the market’s next move.

Tariffs Trigger Uncertainty Across Wall Street

President Trump’s fresh round of 30% tariffs on goods from the EU and Mexico is shaking investor confidence. While markets managed a slight gain at the start of the week, many traders fear that these tariffs—set to take effect August 1—will disrupt global trade flows. Wall Street strategists expect the tariffs to weigh on corporate earnings and slow consumer spending. The result? A stock market that’s stuck in limbo.

Even though the S&P 500 has surged more than 25% since April, experts like Lori Calvasina at RBC say that growth could flatten in the second half of 2025. “We feel neutral,” she wrote, noting that tariff risks remain unresolved. Trump’s move follows earlier duties on Canadian goods and threats aimed at Japan and South Korea. While markets are still hoping for negotiations, the uncertainty is hard to shake.

Tariffs vs. the FED: A Growing Tug-of-War

The Federal Reserve now finds itself in a difficult spot. Trump’s aggressive tariff stance could stoke inflation just as the FED was preparing for potential rate cuts later this year. According to Bank of America, these new tariffs might raise the effective trade-weighted rate by as much as 4%, creating stagflationary pressure—higher prices with slower growth.

That’s a tough challenge for the FED. On one hand, rising inflation might call for tighter policy. On the other, slowing global trade and weaker earnings suggest a need for stimulus. Investors are betting on two rate cuts in 2025, but some analysts are now questioning that outlook. Trump’s open criticism of FED Chair Jerome Powell—and talk of firing him—adds more fuel to the fire.

The Fed is also under scrutiny for costly renovations to its D.C. headquarters. That’s turned into another political flashpoint, further complicating its independence. All these distractions come as inflation data and Q2 earnings loom large.

Earnings Season Collides with Tariff Fears

This week marks the start of second-quarter earnings season, with major banks like JPMorgan Chase reporting results. But instead of just focusing on earnings, traders are also watching how companies react to the tariff climate. Will businesses pass costs on to consumers? Will they trim profit forecasts?

Glen Smith of GDS Wealth Management summed it up: “The big question for markets… is if earnings can overshadow the tariff issues that are still there in the background.” So far, markets have shown resilience, betting that Trump may negotiate softer terms before the August deadline. However, if talks fail, that optimism could fade fast.

Stocks tied to crypto got a boost on news from Congress’s “Crypto Week,” but the broader market is walking a tightrope. A disappointing earnings season could be the tipping point.

Ukraine, Trump, and Secondary Tariffs on Russia

The geopolitical landscape is heating up, too. Trump’s administration is taking a tougher stance on the war in Ukraine, announcing that it will supply weapons to the country and may impose “secondary” tariffs on Russia—possibly as high as 100%. That threat adds new pressure to already strained global relations and risks further market volatility.

The Ukraine conflict has already disrupted energy and grain markets. Now, with new tariffs aimed at Russia, investors fear another round of price shocks. These could ripple through commodities and consumer goods, further complicating inflation and central bank policy.

And it’s not just Russia. The tariff wave has global reach, with countries from Mexico to South Korea in the crosshairs. For investors, this means more caution and less risk-taking.

Tariffs Could Stall the Stock Market Rally

The bottom line: the recent rally in the stock market may be running out of steam. RBC and other Wall Street firms have revised their S&P 500 targets only slightly upward, signaling that big gains are unlikely unless tariff threats ease. Ed Yardeni of Yardeni Research warned that the stock market’s V-shaped recovery might turn into a flat, square-root pattern—meaning stalled growth.

For now, markets remain hopeful that diplomacy will win out and tariffs will be rolled back. But hope isn’t a strategy. Until Trump provides clear direction or the FED steps in with support, expect more market swings. The triple threat of Trump’s tariffs, FED uncertainty, and the Ukraine conflict has investors on edge—and they’re right to be cautious.