Trump’s Trade Tariffs Fuel Recession Fears – Are Tough Times Ahead?

According to data from the betting platform Kalshi, the probability of a recession in 2025 has surged to 62%, up from just 17% earlier this year. On April 5, the chances briefly peaked at nearly 65%, marking a record high for the year.

The increase in recession odds is largely driven by the economic strain caused by the new tariffs aimed at reducing trade deficits. These measures have provoked strong reactions from global trading partners, fueling concerns of a trade war, especially with China and the European Union.

The markets have not taken the news lightly. On April 4, U.S. stock indices saw significant losses: the Dow dropped 5.5%, the S&P 500 fell 6%, and the Nasdaq declined by 5.8%. Analysts estimate that since February, the stock market has shed around $11 trillion in value.

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Major financial institutions are also sounding alarms. JPMorgan has officially predicted a recession in 2025, citing the fallout from the tariffs. The bank’s chief economist, Michael Feroli, foresees rising inflation, slower economic growth, and increased unemployment. Similarly, Moody’s Analytics warns of a potential recession, projecting a spike in unemployment to 7.5%. Deutsche Bank also expressed concerns that the tariffs could significantly reduce economic growth while pushing inflation higher.

Federal Reserve Chair Jerome Powell has voiced similar worries, warning that the tariffs could lead to both slower growth and increased inflation. Meanwhile, Nigel Green of the deVere Group noted that the global economy is also feeling the pressure, with trade tensions contributing to financial uncertainty.

As the situation unfolds, economic analysts remain cautious, wary that ongoing trade policies might exacerbate economic challenges rather than resolve them.

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