US shares seen between winnings and losses on Monday for up to a promised fresh round of President Donald Trump’s tariffs on April 2, which he has called “Liberation Day.”
The market’s roller coaster came a day after Goldman Sachs raised his odds of a recession within the next year from 20% to 35% with reference to the tariffs. The move marked the latest in an increase in recession fears on Wall Street in recent weeks.
A policy of far -reaching taxes on foreign goods could tilt the United States into a recession, experts said. They pointed to the risks of a slowdown for companies that are mirrored in higher tax costs, as well as a shopping reduction, as consumers limit the costs of putting their savings to help weather price increases and a possible financial downturn.
The degree and duration of Trump’s upcoming tariffs remain unknown, experts added, but they pointed to such uncertainty as another reason why the economy could fall into a recession.
“If both businesses and consumers start to worry and withdraw their spending, that’s what can tilt the US into a recession,” Kara Reynolds, an economist at American University, told ABC News.
Mark Zandi, chief economist at Moody’s Analytics, described potential tariffs on April 2 as “The Food for a financial downturn.”
Trump has already announced a flurry of duties, including sector -specific tariffs aimed at cars, steel and aluminum. The United States has also introduced charges on some goods from Mexico, Canada and China.
Over the weekend, Trump told journalists that the next round of tariffs could affect “all countries.”
“The tariffs will be far more generous than these countries were for us, which means they will be friendlier than these countries were for the United States of America,” he said.
Trump administration has largely refused to exclude the possibility of a recession. In a speech in the White House earlier this month, Trump said a “small disturbance” may prove to be necessary to rejuvenate domestic production and restore well paid production tasks.
Experts generally define a recession of the brief metric of two consecutive quarters of decline in a country’s inflation -adjusted gross domestic product or GDP.
Tariffs could threaten economic growth and employment, as duties that have been imparted risk increasing costs for companies that depend on raw materials from abroad, some experts told ABC News.
President Donald Trump speaks to press members while returning to Washington, DC at Air Force One on March 30, 2025, in Fredericksburg, Virginia.
Brendan Smialowski/AFP via Getty Images
Experts largely expect importers to transfer a proportion of customs to consumers in the form of higher prices, which can make companies less competitive as they can fight to preserve customers suffering from stickers.
If business results suffer, companies are likely to freeze or reduce investment and threaten economic growth.
“As business investment goes down, it can trigger a recession,” Anne Villamil, a professor of economics at the University of Iowa, told ABC News.
Even the threatening risk of tariffs can make shoppers troubled and potentially sink the economy further, experts said.
Consumer costs account for about two -thirds of US economic activity. In March, consumer confidence fell to its lowest level since 2021, according to a survey conducted by the conference government.
As consumers’ attitudes are seen, shoppers could encounter customs -induced price increases, leaving buyers even more frustrated.
“It is already emerging in consumer confidence,” Jeffrey Frankel, professor of capital formation and growth at Harvard University. “There is chaos and uncertainty about customs policy.”
However, with some key measures, the economy remains in solid form. Employment stands at robust levels along with a historically low unemployment rate. Inflation is well below a top achieved in 2022, although price increases detect almost one percentage point higher than Fed’s target of 2%.
Villamil, from the University of Iowa, recognized the strength of the economy in recent months. Still, she added, customs could throw the United States into a downturn.
“The concern is that all this policy uncertainty is putting the economy at risk,” Villamil said.
