There’s a sweet spot for tariffs. Markets could revolt if Trump is way off

US stocks are floating near all-time highs as Wall Street maintains cautious optimism that Washington might ink more trade deals, avoiding a worst-case scenario of extraordinarily high tariffs and enabling the resilient economy to continue chugging along.

US stocks are floating near all-time highs as Wall Street maintains cautious optimism that Washington might ink more trade deals, avoiding a worst-case scenario of extraordinarily high tariffs and enabling the resilient economy to continue chugging along. Stocks were higher on Friday. The Dow rose 70 points, or 0.15%. The broader S&P 500 gained 0.25% and the tech-heavy Nasdaq Composite rose 0.2%. The Dow is less than 300 points away from hitting an all-time high. The blue-chip index needs to finish the day with a gain of 0.72% to hit a fresh record, which would be its first this year. President Donald Trump late Tuesday announced a trade deal with Japan, signaling that the United States might be open to further negotiations with other trading partners. The S&P 500 has notched four consecutive records this week as global markets have welcomed progress on trade ahead of Trump’s self-imposed August 1 deadline. The deal with Japan includes a 15% tariff on imports from the nation, which is less than the previously threatened 25% levy. A 15% tariff is still relatively high, but investors were relieved to see that level compared to previous threats, Eric Freedman, CIO at US Bank Asset Management Group, said. As stocks grind higher, markets are adjusting to the prospect of Trump’s tariffs staying in place, Freedman said. But a surprisingly high levy on a major trading partner like the European Union could send a jolt through markets that triggers a downturn.