Recession Odds Surge 16% on Trump's 10% Tariff Policy

Prediction markets have seen a significant increase in the likelihood of a U.S. recession this year, following President Trump's announcement of a new tariff policy. This policy, which imposes a 10% blanket tariff on U.S. trading partners, has been met with criticism from many economists who warn that it could lead to higher prices for goods and stagnation in the global economy.

The odds of a recession have risen sharply on several prediction platforms. Polymarket, for instance, now shows a 50% chance of a recession by the end of 2025, up from 40% the previous day. Similarly, Kalshi's event contract puts the odds at 56%, compared to 43% on Wednesday. Myriad Markets, a crypto-native trading platform, also indicates a 53.6% chance of a recession, reflecting the market's response to the tariff announcement.

President Trump has defended the tariffs, claiming they will spur economic growth and rectify unfair trade practices. However, leading economists and financial analysts have expressed concerns about the potential negative impacts. Ashish Shah, chief investment officer of public investing at Goldman Sachs Asset Management, described the tariffs as a "growth shock" that could hit U.S. consumers hard.

The Economist magazine was even more critical, labeling the tariff policy as "the most profound, harmful and unnecessary economic error in the modern era." This sentiment is echoed by recent economic indicators, which show a downward trend. The March Purchasing Managers' Index revealed that prices are increasing at their fastest rate since mid-2022, while factory activity is contracting. Additionally, the Conference Board's consumer confidence index dropped to its lowest level in four years.

These economic indicators, combined with the market's reaction to the tariff announcement, have led to a significant increase in the perceived likelihood of a recession. The tariffs are expected to make goods more expensive, which could lead to a decrease in consumer spending and a slowdown in economic growth.