Markets had dismissed tariff risks under the assumption that Trump would follow an earlier pattern and back off, in what became known as the so-called TACO trade. That allowed stocks to reach new record-high territory recently, marking a stunning rebound from the collapse triggered by his “Liberation Day” reciprocal tariffs in April.

Wall Street retreated from record highs as investors reacted to President Trump's tariff announcements, including a potential 35% tariff on Canada. Major earnings reports are anticipated next week while Bitcoin rises alongside Nvidia's market valuation.

In Washington, the Senate narrowly passed the “One Big Beautiful Bill Act” on July 1 in a 51–50 vote, with Vice President JD Vance breaking the tie. The House passed the bill on July 3 in a 218-214 vote.