Economists warn of possible U.S. recession risks

Concerns about a potential recession in the U.S. are growing. Economists now estimate a 35-50% chance of a downturn. These fears are intensified by the Trump administration's aggressive tariff policies, which have created tensions with Wall Street and global trading partners. The tariffs, which involve taxes on $9.5 trillion in global trade, are targeted at various goods, such as European alcohol and foreign steel. Experts warn that trade wars can harm economies, citing historical examples like the Smoot-Hawley tariffs that worsened the Great Depression. They say that modern supply chains are intertwined, meaning one country's tariffs can disrupt many others. As the 2024 election approaches, voters dealing with inflation may turn against Trump’s policies. Economists, including those from JPMorgan and Moody’s, have recently increased their recession predictions due to rising tariffs and potential retaliatory actions from countries like China and Canada. Amid market turmoil, the administration maintains that the tariffs are essential for long-term success. Treasury Secretary Scott Bessent described the current market volatility as a "healthy correction." He believes that years of growth under previous administrations led to unsustainable conditions and that tariffs will lead to fairer trade agreements. However, opponents worry that the retaliatory tariffs, such as Canada’s on U.S. dairy products and the EU’s on American bourbon, could spark a full-blown trade war. This may lead to higher prices and layoffs in various industries, especially in agriculture and automotive sectors. The situation risks damaging long-standing international alliances. Europe has already threatened countermeasures against American brands, while China may target areas critical to Trump’s supporter base. Analysts fear that the U.S. could become economically isolated, recalling the negative impacts of past tariff legislation.