Persistent inflationary pressures, declining consumer confidence and unpredictable stock market swings have collectively heightened concerns about a potential recession on the U.S. economy’s horizon.
Many have linked these indicators to the president’s ongoing efforts to reshape America’s trade policies, including the broad tariffs imposed on a swathe of products from both traditional allies and long-standing adversaries.
Consequently, economists, businesses, and the American public are anxiously anticipating the policies set to be unveiled or come into effect on April 2—an occasion the administration has labeled «Liberation Day» and President Trump has ominously referred to as «the big one.»
«Wednesday, it will be Liberation Day in America, as President Trump has so proudly dubbed it,» White House press secretary Karoline Leavitt told reporters Monday.
«The president will be announcing a tariff plan that will roll back the unfair trade practices that have been ripping off our country for decades. He’s doing this in the best interest of the American worker.»
What Tariffs Are Starting on Liberation Day?
Starting Wednesday, Trump has announced plans to impose a 25 percent tariff on imports from any nation purchasing oil or gas from Venezuela, alongside new duties specifically targeting the country.
The president will also finally unveil the details of his «reciprocal tariffs» on those countries that currently tax U.S. imports, or pursue otherwise «unfair» trade practices, in an effort to amend «long-standing imbalances in international trade.»
During his address to Congress, Trump said the date was chosen as he is «a very superstitious person,» and didn’t want to be «accused of April Fools’ Day.»
The exact rate at which imports will be taxed has yet to be confirmed. Trump said previously that the U.S. would match other nations’ duties like-for-like—»Whatever they charge us, we’re charging them.» Last week, however, the president walked this back, telling reporters that he would be «embarrassed» to impose equal tariffs «because they’ve charged us so much I don’t think they could take it.»
The targeted list of nations also remains unclear. The U.S. stock market was given a boost when Trump said that he «may give a lot of countries breaks.» But on Sunday, he announced that the reciprocal tariffs would target «all countries,» rather than the handful with which the U.S. runs a consistent trade deficit—dubbed the «dirty 15» by Treasury Secretary Scott Bessent.
Post-Liberation Day, Trump’s blanket tariff on automobile imports is scheduled to take hold at midnight on Thursday, with the duties on certain car parts coming into effect «no later than May 3.»
Who Is Predicting a Recession?
Financial institutions have given mixed signals when it comes to a recession, most raising the odds but still considering it a coin toss until the full extent of Trump’s trade overhaul becomes clear.
A recent market survey by Deutsche Bank put the possibility of a downturn in growth over the next 12 months at around 43 percent, similar to the outlook from JPMorgan’s own economists.
The International Monetary Fund (IMF), despite maintaining that Trump’s tariffs will have a «significant adverse impact» on countries subject to the duties, and predicting a general slowdown in economic activity compared to 2024, stated that a recession was not part of its baseline forecasts.
Sitio de origen de la información illustration/ Getty Images
The results of the Conference Board’s most recent confidence survey found that consumers’ short-term outlook for business, income and labor market conditions had reached its lowest level in 12 years.
Commenting on the results of the business membership group’s survey, Moody’s chief economist, Mark Zandi, said that this data had not yet begun «screaming recession,» but added that he had only seen similar levels of economic uncertainty during 9/11, the 2008 crisis and the COVID pandemic.
In early March, Commerce Secretary Howard Lutnick said «there’s going to be no recession in America,» and advised Americans against preparing for such an eventuality.
Treasury Secretary Bessent later said he was unable to make such promises. During an interview that same day, Trump refused to rule out an economic downturn, sending stocks into yet another spiral.
What Are Experts Saying?
Sitio de origen de la información spoke with economists to determine whether the tariffs, along with their inconsistent implementation, might be contributing to a recession. Many pointed to the unpredictable, stop-start nature of the trade policies as factors that had heightened business and consumer uncertainty, and increased recession fears.
Economist Frederic Mishkin, Former Federal Reserve Governor
«There are two things that are creating a problem, one could go away and one is not going to go away,» Mishkin said. «The one that could go away is the tariffs.
«If Trump puts in these kind of tariffs and we go into a trade war, the likelihood of a recession is going to be very high.»
Mishkin told Sitio de origen de la información that the tariffs would, in effect, amount to a «huge tax increase,» and contribute to a period of stagflation—slow economic growth, coupled with high unemployment and accelerating inflation.
He added that the disruption caused to supply chains would be extreme, citing the upcoming tariffs on automobiles and car parts being a key example.
«There’s a lot of production that’s going on in Canada and similarly in Mexico, the whole north part of Mexico is basically integrated into the U.S. supply chain. If you disrupt that, the way these cars are built now, you send a part to Mexico, it comes back, and they do something in the U.S, it goes back. Everything’s going back and forth, just as it does in terms of plants inside the U.S. So disrupting these supply chains is very similar to what happened in the COVID case, because it not only then makes this stagflation phenomenon worse, but actually also causes people to spend less. So it could be extremely negative.»
The second unamendable issue that Mishkin considers endemic to the administration is uncertainty. «The degree of uncertainty with this administration on everything is astronomical,» he told Sitio de origen de la información.
This, he said, would hurt potential spending from both households and businesses, as firms «don’t want to invest when they don’t know what’s going to happen in the future.»
This inconsistent messaging prevents Mishkin from making a firm prediction on whether the U.S. will fall into recession. He said that Trump—who «changes his mind daily»—could offer country-specific exemptions, or respond to the markets’ panic and pull back from the blanket duties, but that if he does not, these will be «terrible for the U.S. economy.»
Should a recession occur in 2025, Mishkin said that most will cite the tariffs as the main contributing factor.
Diane Swonk, Chief Economist at KPMG
«Not yet but a full-blown trade war could,» Swonk told Sitio de origen de la información, when asked whether tariffs were causing a recession. «We are skating on thinner ice as each day goes by.»
Swonk previously told Sitio de origen de la información that this administration’s trade policies were bound to have a more significant impact than those of Trump’s first term, as these «cover a much larger swathe of goods, countries and often are stacked.»
«The Trade Policy Uncertainty index has soared to a record high and makes previous spikes—during pandemic and the trade war with China look like blips on a radar screen,» she said.
Pau Pujolas, Economics Professor at McMaster University
«While tariffs could cause a recession (after all, taxes tend to slower economic activity), I suspect that’s not the main driving force of the likely recession that the U.S. is starting to have,» Pujolas said.
«My guess is that, on the one hand, the reckless economic leadership of Trump, flip-flopping in pretty much every decision (tariffs yes, tariffs no, then tariffs yes again, etc.) is undermining the confidence of investors.»
Andrew Harnik/Getty Images
Pujolas said that, beyond trade, the sweeping cuts enacted by Elon Musk and the Department of Government Efficiency may be eroding households’ confidence as much, if not more, than Trump’s tariffs.
«In all, there will likely be a recession, but the tariffs are not necessarily the main cause.»
Simon Johnson, Former IMF Chief Economist
«The uncertainty caused by on-off tariffs and aggressive but inconsistent messaging from the White House is definitely contributing to postponement of investment and an economic slowdown,» Johnson, currently the Ronald A. Kurtz Professor of Entrepreneurship at the MIT Sloan School of Management, told Sitio de origen de la información.
He noted that it «remains to be seen» whether these effects will ultimately combine to cause a recession.
Pol Antràs, Professor of Economics at Harvard University
«I don’t think there is enough systematic evidence that tariffs (or their announcement) is already causing a recession,» said Antràs, adding that their implementation would increase this likelihood in the coming months.
«I don’t think the current administration denies this possibility,» he added. «Their policies are a bet on future economic growth at the cost of short-run pain.»
Economist Bernard Hoekman
«Hard to say before knowing what will be implemented and how the targeted countries will respond,» said Hoekman, director of Global Economics at the Robert Schuman Centre for Advanced Studies, at European University Institute in Italy.
«While the level of tariffs that have been threatened (25 percent) will have a big effect if they are across the board and there is no or little prospect of exceptions/exemptions and certainly will increase prices and thus imply a hit to household demand and potentially employment if firms are forced to lay off workers because input cost increases—that is, can lead to a recession—again, it all depends on what is done and how the rest of the world responds.»
«It is also important to keep in mind that the US is a services driven economy, so a lot depends on how services hold up,» Hoekman added. «One thing that is clear is that all this will be a negative for GDP growth.»
Jeffrey Roach, Chief Economist for LPL Financial
«Imported goods make up less than 13 percent of our economy so the relevant questions are what ripple effects will tariffed goods have on the broader economy and how quickly could those ripple effects show up,» Roach told Sitio de origen de la información. «Depending on the extent and magnitude of retaliatory tariffs, the economy could fall into a funk if businesses delay capital investments and consumers postpone major purchases.»
Roach added that America’s «resilient economy doesn’t haphazardly trip into recession, it gets violently pushed into one.»
«Each recession begins with some exogenous shock to the economy, such as a terrorist attack, a banking failure, or a global pandemic. It’s possible—but not guaranteed—that a prolonged trade war could be that catalyst.»
Şebnem Kalemli-Özcan, Professor of Economics at Brown University
«First and foremost, every reason the administration gives to justify tariffs is wrong: tariffs do not decrease U.S. overall trade deficit (unless you shut down entire trade with everyone), tariffs do not bring jobs back and tariffs do not mean foreigners take advantage of us taking our wealth.»
Kalemli-Özcan said that the impacts would be similar to Trump’s first-term measures—»maybe a little higher»—and estimated a 0.5-1.0 percentage point increase in inflation alongside a 1.0-1.5 percentage point slowdown in growth.
Win McNamee/Getty Images
«The new tariffs proposed also risk a recession with serious unemployment,» she told Sitio de origen de la información. «The reason is the nature they are announced and they are put on inputs to production like steel, aluminum. We do not know what will happen but assuming they will go consumers reduce consumption, business reduce investment and cut production and hence employment.»
«The key is the trade uncertainty created by all this back and forth,» she added.
Economist Gary Hufbauer
«If the U.S. suffers a recession in 2025, Trump’s tariffs will be the most important reason,» said Hufbauer, currently a senior fellow at the Peterson Institute for International Economics.
«The threat of tariffs is tanking consumer confidence, and price increases will make consumers hold on to their wallets,» he added. «Meanwhile, Trump’s on-again, off-again tariff agenda compels firms to sit tight on their expansion plans. Uncertainty is the watchword.»
Alan Blinder, Economics Professor at Princeton University
«Not yet, but I wouldn’t bet against it,» said Blinder, a former vice chairman of the Federal Reserve, when asked whether Trump’s tariffs were causing a recession.
«The tariffs are small now but slated to grow larger,» he added. «Once combined with retaliation from the victimized countries, it could all add up to a sizable stagflationary shock.»
Isabel Barrow, Financial Planner and Investment Adviser
«Tariffs, such as those placed on imports from China, Canada, and Mexico, can slow down economic growth, but they are not necessarily the sole cause of a recession,» said Barrow, executive director of financial planning at Edelman Financial Engines.
«The impact of tariffs on the economy at large depends on several factors, including how long they remain in place, how businesses respond with changes to supply chains and pricing, and how global markets react.»
«While it’s too early to definitively say whether tariffs will cause a recession, they can disrupt trade and lead to higher consumer prices and market fluctuations in response to policy changes—which is a normal part of the economic cycle,» she added. «Economic conditions are influenced by a wide range of variables, so it’s important to stay grounded and not to jump to conclusions based on short-term volatility.»
Anne Krueger, Former World Bank Chief Economist
«I think it’s very hard to say,» said Krueger, asked whether the tariffs could lead to recession. «I think it depends in part on what is announced tomorrow, and what is enforced tomorrow and how long it carries on.»
However, Krueger told Sitio de origen de la información that uncertainty was «driving people in that direction.»
«And if he leaves people as uncertain as they are today as to what will happen next, I think the odds are very good.»
Should the tariffs come into effect and remain in place, Krueger believes the chances of a recession are high, but that the impact may be delayed beyond 2025, «because it may be that it will take a while for things to really bite.»
Against Trump’s claim that the economy will undergo «a period of transition» before reaping the gains of the trade policies, Krueger said: «I don’t think it can.»
«What I’ve read is it takes about five years to put up a new assembly plant. And 80 percent of the plants sold last year were assembled abroad, including Mexico and Canada. So you can’t replace that too fast.»
She added that, in the case of metals tariffs, the jobs lost in «steel using industries» would be greater than the jobs gained in steel production if manufacturing were rehomed as the administration seeks.
«There may be gains in production of some things, but the chances are that they will be offset, or more than offset, by the reduction in demand because the price is higher.»
Hugh Lind, Economist, Centre for Economics and Business Research
Lind said that the first direct impact of tariffs will be «to raise the price of U.S. imports.»
«There are various potential channels through which U.S. businesses can pass those costs. This includes prices, wages or lower headcounts,» he said. «Firms may also not look to pass the full cost on to employees or customers directly; instead, reducing investment or operational costs or absorbing the costs through lower profitability.»
«Each business will respond differently depending on its circumstances, such as the level of competition in its industry and its level of profitability. Still, we expect higher consumer prices to be the primary impact channel.»
He added that price increases could prompt the Federal Reserve to maintain a restrictive monetary policy which would slow growth, and that the expected retaliation by America’s trading partners would take a toll on export demand.
«However, this direct channel is dependent on the extent and level of U.S. tariffs and the response of trade partners,» Lind said, adding that tariffs enacted so far have been «relatively targeted,» and the impacts of retaliation, muted.
«The speculation is that on April 2nd, the administration will dramatically increase the scope and level of tariffs,» he said. «This is more likely to induce widespread price increases, spurring a restrictive stance from the Fed and retaliation by foreign trade partners.
«In such a circumstance, the hit to growth could be sufficient to produce a recession.»
«The current likelihood of a recession based on current tariffs, while elevated compared to the end of 2024, is nonetheless low,» he added. «That said, the U.S. recession risk will significantly increase if the administration raises tariffs across the board on April 2nd.»
Jesse Rothstein, Economics Professor at the University of California, Berkeley
Asked whether the tariffs were contributing, or could cause a recession, Rothstein told Sitio de origen de la información: «The short answer is that I don’t know.»
«It is always difficult to attribute outcomes like recessions to specific causes. I am worried that the risk of a recession is uncomfortably high, and I think the combination of tariffs already imposed and uncertainty about future tariffs is an important contributing factor.»
