Notes

Flying high again. After U.S. President Donald Trump declared his Liberation Day tariffs on April 2, stock markets around the world—and the value of the U.S. dollar—plummeted. The market for American bonds plunged dramatically, too, a consequence that plausibly helped push Trump to pause the tariffs just a week after unveiling them.

Which didn’t help the dollar. Its value against other currencies has declined more in the first half of 2025 than in any year since 1973. America’s first-quarter GDP fell by 0.5 percent, its first negative quarter since the pandemic. Economists worldwide have marked down their forecasts for U.S. growth this year, and many analysts were saying the era of U.S. global economic primacy was over. Meanwhile, Trump still says that on August 1, he’ll impose his tariffs on every country that hasn’t cut a new trade deal with Washington.

But U.S. markets—and the broader economy—don’t seem bothered by any of this. Not only has the S&P 500 stock index regained everything it lost after April; it hit an all-time high in late June—and has just kept rising. In the second quarter of this year—right when Trump declared nearly universal tariffs—the S&P provided returns of 10.9 percent to investors, higher than the index’s average annual return over the past 100 years.

The NASDAQ exchange, led by tech firms, also set new records in June—and is also still climbing. Tech giants like Nvidia and Oracle have never been more valuable, while investors bought more U.S. tech stocks this year than in any year since 2009. Prices of U.S. government bonds are now up for the year. And despite all the tariff chaos and uncertainty, the country’s GDP appears to have grown by 2.4 percent in the second quarter, according to the latest estimate by the Federal Reserve.What’s happening here?

What’s happening here?

—Michael Bluhm