Trump’s Trade Gamble: Recession Roulette Hits the U.S.
Donald Trump swept into his second term vowing a golden age of American wealth. Two months in, he’s singing a grittier tune: brace for a “little disturbance” before the riches roll in. As inflation cools, his tariff-heavy playbook has economists and markets buzzing with a darker forecast—could the U.S., the world’s economic titan, be teetering on a recession?
A recession—marked by a sustained slump in jobs, incomes, and activity—feels closer than ever to some experts. J.P. Morgan’s latest report pegs the odds at 40%, up from 30% in January, blaming a policy shift “tilting away from growth.” Moody’s Mark Zandi bumps his bet from 15% to 35%, pointing at Trump’s trade taxes. Markets are jittery too—the S&P 500, a barometer of America’s corporate giants, just hit its lowest mark since September, shedding gains after a post-election peak of 6,144 on February 19.
Trump’s tariff barrage—slapping duties on goods from top trade partners like Canada, Mexico, and China—drives the unease. Analysts warn these taxes will jack up prices, squeeze profits, and stall business moves, all while the White House hints at more to come. Add in talk of slashing federal jobs and spending, and investors are spooked. “This isn’t just tariffs—it’s a full-on economic remix,” says Brian Gardner of Stifel. “Markets thought he was bluffing for leverage. Now they’re rethinking.”
Yet, February’s inflation dipped to 2.8% from 3%, per the Labor Department—a bright spot Trump downplays. “Adjustments happen,” he shrugged last week, brushing off pleas for clarity. Goldman Sachs, hiking its recession odds to 20% from 15%, sees a lifeline: Trump could dial back if the data sours. Stick to his guns, though, and the risk spikes higher, they warn.
The U.S. was already cooling, thanks to the Fed’s high-rate chill pill. Now, retail sales tanked in February, confidence—sky-high post-Trump’s win—fizzled, and big names like Walmart, Target, and airlines signal a pullback. “Tariffs hitting a wobbly economy could tip us over,” says Kathleen Brooks of XTB. A stock tumble could amplify the pain, especially for rich spenders propping up the consumer-driven machine.
Tech’s AI-fueled rocket ride—think Nvidia’s stock soaring from $15 to $150 since 2023—adds another wrinkle. With recession whispers growing, the “AI bubble” buzz is louder. “If we crash, the AI party’s over,” warns analyst Gene Munster. Fed chief Jerome Powell, though, stays calm: “The economy’s still solid—sentiment’s a lousy crystal ball lately.” Trump? He’s betting on a boom, not a bust.