As we reach the midpoint of 2025, it’s safe to say this year has unfolded in ways few could have anticipated. From sweeping tariffs to market volatility and legislative gridlock, the economic landscape has shifted dramatically and quickly.

Here are a few key developments shaping the year so far:

• Global tariffs Introduced: A sweeping 10% minimum tariff on nearly every country, now in a 90-day pause.
• Market Volatility: The S&P 500 and Nasdaq briefly dipped into correction and bear market territory.
• Inflation Concerns Resurface: Once under control, inflation is now raising fears of stagflation.
• The One Big Beautiful Bill:  A major piece of legislation stirring debate and division in Congress.

Let’s take a closer look at each of those dynamics.

“Tariff” probably wasn’t a word you expected to hear this often in 2025. But since "Liberation Day" and the Trump administration’s sweeping tariff announcement, it has dominated headlines. Those tariffs and the subsequent 90-day pause have created major disruptions. Businesses are scrambling to assess the impact and pivot quickly, which is no easy task. Shifting supply chains or manufacturing sources takes time, and many companies are racing against the clock.

The 90-day pause, announced April 9, ends July 9. The hope is that trade deals, especially with China, will be announced before then. If successful, markets could rally. If not, we may see renewed volatility.

The tariff news triggered a sharp selloff. According to MarketWatch, the NASDAQ briefly fell over 20%, entering bear market territory, while the S&P 500 dropped 15%. The pause helped stabilize things, but uncertainty remains high. Markets have become increasingly headline-driven, and any news, positive or negative, about trade negotiations could move them significantly. For business leaders, staying agile and informed is more critical than ever.

Inflation has been top of mind for consumers for years now, from rising grocery bills to car insurance. Earlier this year, it looked like we were turning a corner. Core CPI was at 2.3% in April, according to the U.S. Bureau of Labor Statistics, close to the Fed’s target. But tariffs tend to be inflationary, raising the cost of goods. If trade deals aren’t reached, or if they include baseline tariffs, we could see inflation rise again.

Combine that with downward revisions to GDP growth, and we’re looking at the potential for stagflation: slow growth and rising prices. It’s a scenario with serious economic consequences, as we saw in the 1970s. Again, much hinges on what happens before July 9.

Meanwhile, Congress is wrestling with a sweeping piece of legislation dubbed the “One Big Beautiful Bill.” Speaker Mike Johnson is pushing for passage by July 4, but the path forward is murky. The bill has sparked intense debate. Some lawmakers are concerned about increased spending, while others oppose proposed tax and budget cuts. The outcome could significantly impact federal funding, taxes, and business incentives.

July is shaping up to be a pivotal month. With major deadlines looming, the economic outlook could shift dramatically, depending on trade negotiations and legislative outcomes.

As we head into the second half of the year, one word seems to define the moment: uncertainty. There are big issues on the table, and some require swift resolution. If the administration can strike meaningful trade deals and get the bill passed, we could see renewed optimism.

We are hopeful for progress toward a more sustainable economic future for our country. In the meantime, staying informed, flexible, and proactive may help us make the most of potential opportunities ahead.

John Graham is a Spokane-based financial advisor with Stifel, Nicolaus & Co. Inc. and can be contacted at (509) 570-5727.