US Recession Odds Rise to Over 60% Amid Tariff Hikes and Market Anxiety

The likelihood of a US recession in 2025 has risen to over 60% due to increased tariffs announced by the US government. Traders on Kalshi and Polymarket predict a 61% and 60% chance of recession, respectively, amid economic concerns. Historical parallels to the Smoot-Hawley Tariff Act and potential interest rate cuts by former President Trump may lead to a global slowdown, impacting financial markets and cryptomarkets.

The likelihood of a U.S. recession in 2025 has surged to over 60% following significant tariff hikes announced by the U.S. government, according to traders on Kalshi and Polymarket. This heightened economic uncertainty is causing ripples across global and cryptocurrency markets.

Key Takeaways:
- Traders on Kalshi and Polymarket predict a 61% and 60% chance of recession in 2025, respectively.
- The tariffs are raising concerns about global economic stability and financial market volatility.
- Historical parallels to the Smoot-Hawley Tariff Act suggest potential global slowdowns and interest rate cuts by former President Trump.

The tariffs, aimed at reducing interest rates amid economic tension, are expected to create a fertile ground for interest rate cuts. An inverted yield curve and historical trends indicate slowing growth and potential prolonged recession. Cryptocurrency markets could face suppression under worsening conditions, adding complexity to investor decisions.

Mark Zandi, chief economist at Moody's Analytics, echoed similar concerns in an interview with NPR. He highlighted that the current trade war is causing economic damage, with consumers and businesses becoming increasingly cautious. Zandi predicts that the odds of recession will continue to rise with each passing day, potentially leading to a recession later this year.

J.P. Morgan Research has also raised the probability of a global recession to 40%, attributing the increased risk to heightened trade policy uncertainty. The new slate of tariffs, set to be announced in early April, is expected to move the effective U.S. tariff rate above 10%, resulting in a 0.5 percentage point drag on 2025 U.S. and global GDP.

The potential long-term impacts of these tariffs include disruptions to global trade dynamics and financial market stability. Regulatory measures may be necessary to stabilize tensions and mitigate the broader economic shocks.

Investors and financial professionals should closely monitor the evolving economic landscape and adjust their strategies accordingly. The uncertainty created by these tariffs underscores the need for cautious optimism and prudent risk management.