Economists now predict a GDP contraction for the US in 2025 as Trump’s sweeping tariffs trigger global sell-off, recession fears, and a potential Fed rate cut.
Washington, D.C. | April 5, 2025 –
The global economy is reeling from the fallout of President Donald Trump’s surprise tariff announcement, with Wall Street suffering its worst week since the COVID-19 pandemic. Experts warn the US is now at risk of a full-blown recession, with ripple effects already shaking global markets.
According to JPMorgan Chief US Economist Michael Feroli, real GDP growth for 2025 is expected to contract by 0.3%, a sharp downgrade from earlier forecasts of 1.3% growth. He added, “This contraction is expected to depress hiring and could raise unemployment to 5.3%.”
🚨 Tariff Domino: China Fires Back
Trump on April 2 launched a 10% baseline tariff on all imports, alongside harsher rates for nations like China (34%), India (26%), and the EU (20%). In retaliation, China slapped a 34% duty on American goods, escalating trade tensions to new heights.
Also Read: “They Played It Wrong, Panicked”: Trump Taunts China Amid Escalating Global Tariff War
“China played it wrong, they panicked — the one thing they cannot afford to do!” Trump posted on Truth Social.
📉 Market Meltdown
Following China’s retaliation:
- S&P 500 plunged 6%, its worst weekly performance since March 2020
- Dow Jones dropped 2,231 points (5.5%)
- Nasdaq sank 5.8%, entering correction territory
- Over $5 trillion was wiped from the US stock market
🗣️ Powell Speaks, But Holds
Federal Reserve Chair Jerome Powell acknowledged the growing economic risk but stopped short of promising immediate action:
“We face a highly uncertain outlook… it’s not clear what the appropriate path for monetary policy will be. We must wait and see.”
However, JP Morgan now predicts the Fed will start cutting rates by June, potentially slashing them to 2.75%-3% by January 2026.
📉 A Recession ‘Imminent’
Peter Tchir, head of macro strategies at Academy Securities, stated bluntly:
“We are rapidly heading towards a recession. The tariffs are a disaster—not just for the US, but globally.”
Mark Zandi, Chief Economist at Moody’s Analytics, warned of a “dark scenario” where:
- GDP falls by nearly 2%
- Unemployment spikes to 7.5%
- Recession extends well into 2026
He assigns a 15% probability to this severe outcome.
📢 Trump Pushes for Rate Cuts
While economic uncertainty builds, Trump is pressuring the Fed to act faster. In a post laced with trademark flair, he declared:
“CUT INTEREST RATES, JEROME! Stop playing politics! Energy prices are down. Inflation is down. Eggs are down 69%! Jobs are UP. A BIG WIN for America.”
📊 What’s Next?
As the world grapples with Trump’s aggressive “reciprocal tariff” doctrine, economists warn that:
- Global supply chains could be disrupted
- Trade deals may crumble
- Inflation may rise again
- The fragile post-COVID recovery could stall
One thing is certain: the Trump tariffs have rewritten the global economic playbook—and the next chapters might be painful.
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Trump tariffs, US recession, global market crash, S&P 500, Dow Jones, Jerome Powell, reciprocal tariffs, China retaliation, inflation, unemployment, Fed interest rates, economic slowdown, trade war, Peter Tchir, JPMorgan, Moody’s Analytics