Trump's Tariffs Spark 60% Recession Risk by 2025, Markets Reel

Donald Trump's introduction of tariffs has sparked concerns about a potential US recession, with investors, experts, and major financial institutions like JP Morgan and Goldman Sachs updating their predictions. The financial markets are experiencing significant turmoil, with stocks and cryptocurrencies struggling and hard assets also being affected. The tariffs, which were intended to boost domestic production and save American jobs, have instead led to economic uncertainty and fears of a recession.

Countries affected by the tariffs, such as China, the EU, and Japan, are developing strategies to mitigate their impact. Some, like China, have implemented retaliatory tariffs, while others are seeking cooperation. This has led to market volatility and speculation about the onset of a financial crisis. Social media platforms are filled with discussions about rising inflation, declining yields, and the potential for a recession in the US. There is a growing consensus that the Federal Reserve will need to cut interest rates to address these issues. Trump himself has called for rate cuts, urging Powell to act before it is too late.

JP Morgan has increased the likelihood of a recession to 60% by 2025, citing disruptive US policies as the primary cause. Goldman Sachs has also raised its recession odds from 20% to 35%. According to the analyst's forecast, Oxford Economics predicts 4% core inflation and GDP growth of just 1.4%. Moody’s Analytics predicts 7.5% unemployment and a 2% GDP contraction if retaliation continues. These predictions align with investor concerns, as Polymarket data shows that the odds of a US recession have surged to 57%.

Federal Reserve Chair Jerome Powell has expressed concerns about Trump's tariffs, stating that they are larger than expected and hinting at potential economic fallout. However, neither Powell nor the Fed has forecasted a recession. The combination of Powell's indirect concerns, Polymarket's probability assessments, and JP Morgan's predictions has led to a rise in bearish sentiments among investors, with visible impacts on the stock market's performance. While the future remains uncertain, 2025 is expected to be a year of significant economic turning points.

All eyes are now on the upcoming Fed meeting and any positive updates regarding Trump's tariff policies. The economic landscape is fraught with uncertainty, and the actions taken by the Federal Reserve and the administration will be crucial in determining the trajectory of the US economy in the coming years.