Wall Street is bracing for economic turbulence following former President Donald Trump’s announcement of sweeping new tariffs, set to take effect April 9. The Trump tariffs 2025, which impose levies ranging from 10% to 46% on imports from nearly every major trading partner, have triggered widespread market volatility and prompted dire warnings of a U.S. recession risk from top economists and investors.
The S&P 500 and Canada’s S&P/TSX composite index both fell into correction territory, underscoring investor anxiety over the potential economic fallout. JPMorgan Chase & Co. has now revised its outlook to forecast negative growth in the second half of 2025.
“This is the biggest policy mistake in 95 years,” said Jeremy Siegel, professor emeritus at the Wharton School. “It will go down in history as one of the worst moves to ever come out of Washington.”
What Are Trump Tariffs 2025?
The proposed Trump tariffs 2025 use a controversial formula: the U.S. trade deficit with each country is divided by the value of imports, then halved to create a tariff rate. That methodology penalizes countries like Vietnam and Cambodia, where trade imbalances are high and U.S. exports minimal—resulting in tariffs of 46% and 49%, respectively.
Even close allies aren’t spared. The European Union, which levies an average tariff of just 1% on U.S. goods, is facing accusations from Trump of a 39% tariff—an assertion economists widely dispute.
“The mathematics wouldn’t pass a first-year economics class,” said Karl Schamotta, chief market strategist at Corpay. “This formula is untethered from trade reality.”
Related News
- Platinum Shares Slide After Trump Tariffs—But Bulls See Buying Opportunity
- Anglo American CEO Warns of Rising Mining Costs Due to Trump Tariff
- Canadian Companies Brace for Trump’s Tariffs: Strategies and Survival Tactics
- Trump Reinstates 25% Steel Tariffs, Sparking Global Trade Tensions
Rising U.S. Recession Risk
JPMorgan now predicts a U.S. recession risk of 60%, up from 40% before the announcement. Real GDP is expected to contract by 0.3% in 2025, marking a stark downgrade from the bank’s earlier 1.3% growth forecast. Chief U.S. economist Michael Feroli expects two consecutive quarters of negative growth, warning that the tariffs will lead to stagflation—an environment of rising prices and slowing economic activity.
“We are likely to see inflation not only on imports but also domestically, as input costs rise and supply chains contract,” wrote JPMorgan CEO Jamie Dimon in his annual shareholder letter.
Markets in Retreat
Since the announcement, the S&P 500 has slipped into correction territory, with high-growth sectors such as tech and luxury retail leading the downturn. Dan Ives, managing director at Wedbush Securities, slashed price targets across the board.
“This is the most absurd thing I’ve seen on Wall Street in 25 years,” Ives said on Bloomberg. “It’s the worst policy error in a century.”
Luxury firms like LVMH and Hermès are also exposed. A note from Barron’s described the tariffs as a “growth killer” for brands dependent on global supply chains and high-end U.S. consumer spending.
Wall Street Breaks With Trump
Longtime Trump backer Bill Ackman of Pershing Square Capital called the plan “a self-induced economic nuclear winter” and urged a 90-day delay to negotiate revised trade terms. Even conservative voices have started distancing themselves from the plan.
“None of this makes a whole lot of sense,” said David Rosenberg, president of Rosenberg Research. “But since last November, we’ve become immune to insanity.”
Federal Reserve Signals Alarm
Fed Chair Jerome Powell, in unusually candid remarks, warned of “larger-than-expected economic effects” stemming from the tariffs. “Higher inflation and slower growth are likely,” he told an audience at the SABEW conference, reinforcing fears that the Fed may be forced into a policy corner—managing inflation while confronting recession.
Echoes of the 1930s?
Economists are drawing parallels to the infamous Smoot-Hawley Tariff Act of 1930, which helped exacerbate the Great Depression. Derek Holt, head of capital markets economics at Scotiabank, wrote: “U.S. economic policy from the dark ages is proving to be the ultimate wealth killer.”
“This isn’t just about trade policy,” said Ray Dalio of Bridgewater Associates. “It’s about positioning the U.S. for a broader conflict—economic, political, and potentially military.”
What Comes Next?
With markets in turmoil and growth forecasts slashed, the question remains whether Trump will reconsider. Nouriel Roubini put it bluntly: “If he has any brain in his head, he will know that he has to de-escalate.”
For now, investors and economists alike are girding for volatility. The Trump tariffs 2025 have turned a simmering trade narrative into a full-blown economic risk. As policymakers weigh the long-term consequences, the U.S. recession risk has shifted from theoretical to probable—and markets are pricing it in accordingly.
