What's happened
As of April 16, 2025, economists are increasingly predicting a recession in the US due to new tariffs imposed by the Trump administration. Goldman Sachs raised the likelihood of a recession to 45%, while JPMorgan estimates it at 60%. Concerns over inflation and economic stability are growing amid rising costs and uncertainty for businesses.
What's behind the headline?
Economic Implications
- The recent tariffs are expected to increase the effective tariff rate significantly, leading to higher costs for consumers and businesses.
- Goldman Sachs has raised the probability of a recession to 45%, indicating a shift in economic outlook.
- JPMorgan's estimate of a 60% chance of recession highlights widespread concern among economists.
Market Reactions
- The stock market has shown volatility, with significant intraday swings, reflecting investor uncertainty.
- The pause on tariffs for other countries may provide temporary relief but does not alleviate concerns about the long-term economic impact.
Future Outlook
- If tariffs remain in place, businesses may reduce hiring and investment, further slowing economic growth.
- The Federal Reserve faces a challenging situation, balancing inflation control with the need to stimulate growth if a recession occurs.
What the papers say
According to the South China Morning Post, the MSCI China Index has been declining while the Nikkei 225 has risen, indicating a shift in investor sentiment towards Japan and India amid concerns about China's economic stability. Morgan Stanley and BNP Paribas project modest GDP growth for the US, with rising unemployment and inflation. Business Insider UK highlights that UBS sees current market volatility as an opportunity for long-term investors, despite ongoing trade tensions. Goldman Sachs has fluctuated its recession probability based on tariff developments, reflecting the uncertainty in the market. The Independent notes that the Trump administration's tariff policies are causing significant concern among economists, with predictions of a recession becoming more prevalent.
How we got here
The US has recently implemented substantial tariffs on imports, particularly targeting China, which has raised concerns about economic stability. Goldman Sachs and JPMorgan have adjusted their recession forecasts, reflecting heightened uncertainty in the market and potential impacts on growth.
Go deeper
- What are the implications of the new tariffs?
- How are investors reacting to the economic forecasts?
- What should I consider for my investments?
Common question
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What Are the Economic Impacts of Trump's New Tariffs?
President Trump's recent tariff announcements have sparked significant discussions about their potential effects on the global economy. With tariffs on Chinese imports reaching 125% and a 10% baseline tariff on most US imports, many are left wondering how these changes will impact various industries, inflation rates, and the overall economic landscape. Below are some common questions and answers regarding the implications of these tariffs.
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What is the US Economic Outlook Amid Tariffs in 2025?
As the US economy navigates through 2025, recent tariff announcements by President Trump have raised significant concerns about inflation, unemployment, and overall economic growth. With projections from major banks indicating a cautious outlook, many Americans are left wondering how these changes will affect their financial future. Below are some common questions regarding the current economic climate and its implications.
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How Do Political Events Like Yoon's Impeachment Affect Economic Policies?
Political events can have a profound impact on economic policies and public sentiment. The recent impeachment of South Korean President Yoon Suk Yeol has shifted the political landscape, raising questions about how such events influence economic forecasts and public opinion. Below, we explore key questions surrounding this intersection of politics and economics.
More on these topics
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The United States of America, commonly known as the United States or America, is a country mostly located in central North America, between Canada and Mexico.
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The Goldman Sachs Group, Inc., is an American multinational investment bank and financial services company headquartered in New York City.
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Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
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JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City.
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The Federal Reserve System is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics led to the desire for central control of the m
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BNP Paribas S.A. is a French international banking group. It is the world's 8th largest bank by total assets, and currently operates with a presence in 72 countries.
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Morgan Stanley is an American multinational investment bank and financial services company headquartered at 1585 Broadway in the Morgan Stanley Building, Midtown Manhattan, New York City.