On July 20, 2026, Raymond James published analysis concluding that the apparent resilience of U.S. equity earnings is "resilience by construction" — index evolution and the concentration of AI-related mega-caps are masking mixed fundamentals beneath the surface of the broader market. The note lands as the U.S. tariff regime enters its most aggressive phase in decades, with multiple new duties either imposed or imminent within a single week.

The U.S. imposed new 50% tariffs on $20 billion worth of Canadian products on July 20, 2026, with targeted categories including wine Reuters. Days earlier, on July 16, the U.S. had set 25% tariffs on most imports from Brazil, scheduled to take effect July 22 per the USTR Reuters. These actions layer on top of a broader tariff architecture that has been tightening throughout 2026: in June, the administration proposed duties of up to 12.5% on imports from 60 countries over forced labor concerns Reuters. In May, Trump set a July 4 deadline for the EU to comply with a trade deal or face higher tariffs, including a raise of the EU vehicle tariff to 25% from a previously agreed 15% Reuters.

Meanwhile, the temporary 10% global tariffs are set to expire July 24, 2026 Bloomberg. Mike Froman, in a July 16 Bloomberg interview, stated that Trump remains committed to increasing tariffs despite that looming expiration. The signal is that the expiration of the blanket 10% rate is not a de-escalation but a transition point into a more granular, higher-tariff structure.

The Raymond James analysis and the tariff escalation are not unrelated stories. For portfolio managers and risk desks, the interaction matters. The Raymond James note argues that index-level earnings strength is driven in part by how indices have evolved — reconstituting toward companies whose earnings benefit from or are insulated by the current policy regime, while the median underlying constituent faces margin pressure from input costs that tariffs compound. When a handful of mega-cap AI names with high gross margins and limited direct tariff exposure dominate index weight, the aggregate EPS print can appear robust even as the broad-list earnings distribution deteriorates.

The tariff schedule now spans three continents and multiple product categories. The 50% duty on $20 billion in Canadian goods raises the stakes for supply chains that route through Canada, particularly in categories where substitution is limited. The 25% Brazilian tariffs, taking effect July 22, add another layer for importers with Latin American sourcing. The forced-labor tariff proposal, while not yet finalized, covers 60 economies and would impose up to 12.5% in additional duties — a broad net that could affect companies well beyond those with direct China exposure.

For earnings models, the key variable is pass-through. Companies facing the new tariff rates have three options: absorb the cost (margin compression), pass it to consumers (demand risk), or restructure supply chains (capex and time). Each path hits the income statement differently, and the Raymond James analysis suggests the index construction may be obscuring how widely and how severely these pressures are spreading below the mega-cap layer.

The July 24 expiration of the 10% global tariff does not appear to be a catalyst for relief. Froman's characterization of Trump's posture — that the administration remains committed to increasing tariffs — indicates the base case is escalation or at minimum persistence, not rollback. The structural shift is from a flat, temporary levy toward a differentiated, permanent-seeming rate schedule that targets specific countries and product categories.

For allocators, the practical question is dispersion. If index-level earnings are being supported by construction effects and a narrow set of AI-driven mega-caps, while the underlying distribution of constituent earnings is widening under tariff pressure, then index-level valuations may be pricing in a narrower set of outcomes than the broad market actually faces. The Raymond James framing — "resilience by construction" — is a reminder that aggregate earnings beats and index-level price action can diverge meaningfully from the experience of the median listed company. The tariff wall tightening across the same week sharpens that divergence.

None of this is a directional call on equities. It is a framing of what the data is doing underneath the index print, and what the policy path implies for the cost structure of companies that do not happen to sit in the top few weightings.