Is the world staring at a recession? ‘There will be blood’, warn experts on Donald Trump’s reciprocal tariffs impact – The Times of India-OxBig News Network

Is the world staring at a recession? Economic forecasts have darkened on Wall Street following Donald Trump‘s broad tariff announcements, with major financial institutions signalling recession concerns. Bloomberg reports that JPMorgan’s Chief Economist Bruce Kasman has elevated global recession probability to 60% for 2025, increasing from 40%. “The effect of this tax hike is likely to be magnified—through retaliation, a slide in US business sentiment, and supply chain disruptions,” Kasman wrote in a note titled ‘There Will Be Blood’.
Goldman Sachs has also increased the recession likelihood to 35% from 20% for the upcoming year. It has reduced its 2025 GDP prediction to 1% and anticipates unemployment reaching 4.5%. “The increase in our recession probability reflects the sharp deterioration in household and business confidence in the outlook over the last month,” according to Goldman’s analysis.
Also Read | Is it 26% or 27%? Donald Trump’s reciprocal tariffs on India revised downward to 26% in new White House document
The S&P 500 experienced its steepest decline since 2020 following the tariff announcement by US President Donald Trump, with $2.4 trillion wiped out.
The proposed US tariffs would represent unprecedented trade restrictions since the early 1900s, featuring a universal 10% import duty alongside elevated rates for numerous nations.
Such measures could significantly increase retail prices for US consumers across various products, from cannabis to trainers to Apple’s iPhone. According to Rosenblatt Securities’ calculations, if Apple transfers the additional costs to buyers, a premium iPhone model could be priced at approximately $2,300!
US tariffs have reached levels that are transforming the global economic outlook, significantly raising US recession risks and constraining the Federal Reserve’s ability to lower interest rates further, Fitch Ratings has said.
“Tariff hikes will result in higher consumer prices and lower corporate profits in the US. Higher prices will squeeze real wages, weighing on consumer spending, while lower profits and policy uncertainty will act as a drag on business investment. Upward pressure on goods prices from tariffs – in the context of a recent large jump in US households’ medium-term inflation expectations – means the Fed is likely to become more cautious about further rate cuts in the near term. We expect these effects will likely outweigh the benefits US companies might gain from increased protection against foreign competition,” Fitch has said.
Also Read | Wall Street’s $2.4 trillion shock: How Trump’s tariffs rattled global markets- 10 big numbers
The University of Michigan’s sentiment survey indicates unprecedented levels of Americans expecting rising unemployment since the Great Recession. Goldman Sachs noted, “While sentiment has been a poor predictor over activity in recent years, we are less dismissive of the recent decline because economic fundamentals are not as strong as in prior years.”
Moody’s Analytics Chief Economist Mark Zandi raised his recession forecast to 40% from 15%. “The intensifying trade war and government spending cuts are behind this,” he wrote on X. Trump’s proposed 25% tariffs on imported vehicles and components, along with anticipated trade partner responses, present significant risks.
Trump maintains his position on tariffs despite economic cautions. During an Air Force One interview, he said, “You’d start with all countries, so let’s see what happens.” The White House projects annual tariff revenues reaching $600 billion, though economists dispute this figure, suggesting businesses and consumers will absorb the costs.