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.

The major stock market indexes were flat to slightly lower for the week, but right at highs despite big new Trump tariffs.

Both the S&P 500 and Nasdaq Composite hit record closing highs on Friday, surpassing previous highs reached in February and December, respectively. There are a few things that could push this rally further, but there are also risks that investors should be aware of.