Threat of Recession in 2025, Trump's Tariffs Send Global Markets Plummeting

The announcement of a groundbreaking tariff policy by President Donald Trump has sent global markets into turmoil, raising concerns about the possibility of a recession for both the US and the world.

Stock markets around the world witnessed significant declines recently. The Dow Jones index dropped by 1,679 points, marking a 3.98% decrease. Similarly, the S&P 500 index saw a decline of 4.84%, and the Nasdaq, known for its focus on technology stocks, experienced a sharp plunge of 5.97%. These declines represent the largest single-day drops for these indices since 2020.

l market also felt the impact of this downturn. In Europe, the STOXX 600 index recorded a substantial decrease of 2.57%, wiping out all gains made since January. Germany's DAX index fell by 3%, while France's primary index experienced a significant drop of 3.31%, the most significant decline seen since July 2023. Italy's main index also took a hit, plummeting by 3.6%, marking its most substantial decline since March 2023.

The significant drop occurred following the implementation of extensive tariffs by Trump on nearly all imported goods in the US. This move raised concerns about potential retaliatory measures from trading allies and its repercussions on the worldwide economy.

As a result, the US dollar depreciated to its lowest point since October, completely nullifying the gains it had made since Trump's re-election triumph in November. While tariffs are typically expected to bolster the dollar, investors are apprehensive that this strategy could ultimately hinder long-term economic growth in the US.

In the Asian market, the Nikkei 225 index in Japan experienced a decline of 2.77%, whereas Hong Kong's Hang Seng index dropped by 1.52%.

The significant drop occurred following the implementation of extensive tariffs by Trump on nearly all imports into the US. This move raised concerns about potential retaliatory measures from trade partners and its repercussions on the worldwide economy.

2025 Recession Looms Due to Massive Tariffs

According to JPMorgan analysts, there is a looming threat of a recession in the US and global economy by 2025 if President Trump continues to uphold the significant tariffs. Even before the tariffs were announced, JPMorgan had already calculated a 40% probability of the US slipping into a recession.

The analysts at JPMorgan have projected that these tariffs could result in a staggering tax increase of US$660 billion annually for American citizens, marking it as the largest tax hike in recent history. Furthermore, the tariffs are expected to drive inflation up by 2%, further complicating efforts for economic recovery.

The repercussions of these tariffs may not end there, as other nations are likely to retaliate with their own tariffs, potentially exacerbating the adverse effects on the United States.

A group of prominent CEOs in the United States, known as the Business Roundtable, has issued a warning about the potential negative impact of President Trump's new tariffs on various sectors of the US economy, including industries, workers, and exports.

According to a report by Fitch Ratings, the implementation of these new tariffs is expected to raise the average US tariff rate significantly, from 2.5% to 22%. This surge would mark the highest level since 1910, surpassing even the tariffs imposed under the Smoot-Hawley Act of 1930, which exacerbated the effects of the Great Depression.

Olu Sonola, who serves as the head of US economic research at Fitch Ratings, described this tariff policy as a "game changer" with the potential to push numerous countries into recession. He emphasized that the persistence of these tariffs could render most economic forecasts obsolete.