Recession Warnings: US President Donald Trump’s latest decision to impose new tariffs on imports has shaken global markets. Many financial experts and economists now fear that a recession in the US may be unavoidable. Following this move, the stock market witnessed a sharp decline with losses totaling over $5 trillion.
According to JPMorgan Chase & Co., the US economy is now expected to shrink by 0.3% by the end of the year. This is a big change from their earlier estimate of 1.3% growth. Michael Feroli, the chief economist at JPMorgan, warned that this economic slowdown could increase the unemployment rate to 5.3%.
On April 2, Trump announced a 10% tariff on all imported goods. He also introduced higher tariffs on goods from specific countries. In response, China imposed a 34% tariff on US imports. Trump immediately replied with a 34% tariff on Chinese goods. These back-and-forth actions have sparked concerns about a full-blown trade war.
The reaction in financial markets was immediate. The S&P 500 index dropped by 6%, marking its worst week since the pandemic crash in 2020. The Dow Jones fell over 2,200 points, and the Nasdaq dropped nearly 6%. These losses show how sensitive markets are to global trade tensions.
Jerome Powell, the US Federal Reserve Chair, has expressed concern over this uncertain economic situation. He said that the trade war could cause both slower growth and higher inflation. However, Powell also mentioned that there is no clear direction for monetary policy at the moment. Still, many believe the Fed may cut interest rates in June to help the economy.
Experts are becoming more vocal about the risks. Peter Tchir from Academy Securities called the tariff decision a “disaster” for both the US and the world economy. Moody’s Chief Economist Mark Zandi predicts a serious recession if the tariffs remain in place. He said GDP could drop by nearly 2%, and unemployment may rise to 7.5% in 2026.
Trump defended his actions on social media. He said China “played it wrong” and praised falling prices and rising job numbers in the US. He also pushed the Fed to cut interest rates calling it the “perfect time” to do so.
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