Concern about a possible recession is mounting in the United States, amid the Trump Administration’s proposed reciprocal tariffs.
Not ruling out the possibility of economic difficulty, the US President said in an interview broadcast on Fox News last week that the US would have to adjust to “big” changes.
Asked if he was expecting a recession, Trump said: “I hate to predict things like that. There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. There are always periods of […] it takes a little time. It takes a little time. But I think it should be great for us.”
The stock market started the week by recording losses on Monday morning, as concern mounts about the impact of President Trump’s trade policy. The Dow Jones Industrial Average opened with a loss of 1 per cent, while the Nasdaq composite was down 2.9 percent, and the S&P 500 index fell by 1.8 percent.
Meanwhile, FTSE 100 plunged by more than 1 per cent amid fears US tariffs will trigger a worldwide economic downturn.
Since the beginning of March, stocks have fallen steadily – with Wall Street becoming increasingly fearful of a recession, the New York Times and Time report. It follows public and private sector job data, consumer confidence surveys and inflation readings which have pointed to the economy backtracking as Trump has shifted tariffs on products from Mexico, Canada and China. In the three months since the election, the US housing market has also started to slow, and service sector activity has contracted for the first time in two years.
However, some experts say that predictions around a recession are overblown, with Forbes reporting that although the odds of an economic slowdown are higher, the data does not suggest a recession is imminent.
U.S. policies “appear to be tilting towards a less business-friendly stance,” JPMorgan Chase economists Bruce Kasman and Joseph Lupton said on Friday, adding: “The trade war heated up more than we had expected, and is concentrated in North America, where it will likely generate large spillovers to US growth.
The top-ranking economic official in Trump’s administration, Treasury Secretary Scott Bessent told CNBC on Friday that the economy could take a hit, but seemed to underplay fears.
“Could we be seeing that this economy that we inherited [is] starting to roll a bit? Sure…. We’ve become addicted to this government spending, and there’s going to be a detox period,” Bessent said.
It follows last week’s announcement by the President that all goods from Canada and Mexico will be subject to a tariff of 25 per cent. The US has been the worst-performing major market over the last three months, while at the same time, European shares have risen by 15 per cent.
Deutsche Bank has warned that the tariff war turmoil could even put the dollar at risk on the global stage, as the US currency last week fell against the pound and the euro despite the inflationary threat from tariffs.
George Saravelos, global head of FX research at Deutsche Bank, wrote: “We do not write this lightly. But the speed and scale of global shifts is so rapid that this needs to be acknowledged as a possibility.”
Meanwhile, Trump, when asked for more “clarity” on tariffs, in an interview with Fox last week, said that tariffs “could go up as time goes by, they may go up…” adding: “This country has been ripped off from every nation in the world, every company in the world. We’ve been ripped off at levels never seen before, and what we’re going to do is get it back.”
“Build it here, there’s no tariff,” he said, reiterating his belief that more business and production should be carried out on American soil, in line with his policy of “America first.”