Last Updated: March 12, 2025, 09:36 IST
Trump’s tariffs, including reciprocal tariffs worldwide and a more intense trade war with Mexico, Canada, and China, are a pivotal factor for rekindling fears of a recession.
Trading day woes have recently gripped Wall Street, suffering one of its grim days since 2022. The culprit behind this is none other than US President Donald Trump’s economic manoeuvres, mostly his daunting tariff strategies. These dramatic tactics have unsettled global markets and spurred geopolitical frictions, stirring quite the financial kettle.
Contents
What Is A Recession?
A recession is essentially a significant decline in economic activity that spreads across the economy and lasts more than a few months. The National Bureau of Economic Research is the torchbearer in determining this, crafting a narrative of the business cycle by detailing its various stages—peaks, troughs, expansions, and contractions.
Their assessment rides on three steely criteria: depth, diffusion, and duration. Another golden rule to foreshadow a recession is observing consecutive quarters of shrinking real gross domestic product (GDP), the broadest gauge of economic activity. In 2022, the US had a taste of this, albeit briefly, as the second quarter numbers were eventually revised into showing slight expansion. What followed was a transitional phase as the stars of economic hope aligned post the global pandemic’s severest impact, as CNN recounted.
The Growing Odds of A Recession
Concerns of a looming recession have indeed gained traction. According to Bloomberg, US consumer confidence nosily nosedived this month, a statistic that hasn’t dipped so moodily since August 2021. The Atlanta Federal Reserve’s model ominously signals potential negativity in economic growth in the first quarter of 2025.
The Crux of the High Tariff Plans
Trump’s tariff theatrics, including his plans for global reciprocal tariffs and a fiery trade skirmish with giants like Mexico, Canada, and China, heighten these anxieties. A study conducted with academic heavyweights MIT, Harvard, the University of Zurich, and the World Bank unearthed that Trump’s tariff gambits in his initial term did not quite twiddle the US employment dial either way. His steel tariff dalliance in 2018 echoed with minimal resonance in the domain of American steel job numbers.
However, the retaliatory taxes mirrored by nations like China landed telling blows, particularly on farmers. Despite some government largesse to cushion such retaliatory impacts, funded partly by the very tariff levies, the broader economic discomfort persists. The consequences are now filtering through the economy with businesses on tenterhooks over uncertain input costs and multinational investments stalling as per Time.
Trump’s Stance on Recession and Tariffs
Trump, not one to quail easily, remains firm. He appears not to discount recession prospects, albeit emphasising a patient wait for his policies to foster the intended wealth renaissance in America. He openly muses on inflation, suggesting that rates might rise temporarily, cushioned somewhat by the present dip in interest rates. Commerce Secretary Howard Lutnick chimes in, eschewing any contraction gloom and acknowledging possible climbs in commodity prices.
A confounding twist emerged from White House Press Secretary Karoline Leavitt, heralding the commendable 93% of job gains in February attributed to the private sector, a feather in Trump’s policy cap. As the administration proceeds amidst wind and storm, insisting on their pro-growth commitment, industry observers wait with bated breath.
Concluding Thoughts
In sum, the Indian Express surmises that despite Trump’s buoyant assertions and the economic players’ jittery headwinds, a significant chunk of the populace remains skeptical. President Trump urges patience, suggesting that reshaping the economic fabric takes a bit of time. As for the critics and investors, only time will unveil whether Trump’s theatrical tariffs will be a masterstroke or folly.
