Recession alert: Trump tariffs ‘act of war’ on global economy as US economy forecast to SHRINK

This modelling forecast is considered the gold standard for predicting the trajectory of the world’s latest economy and suggests the White House’s tariff agenda.

Furthermore, the latest estimates from the Atlanta Fed are a notable reversal from GDP Now’s previous projection of GDP growth of 3.9 only four weeks ago.

Trump has touted tariffs as his signature fiscal policy to bolster the incomes and livelihoods of everyday Americans, which are taxes charged on imports coming in from one country to another.

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Critics have claimed tariffs are inflationary, will slow down the pace of future interest rates and contribute towards a recession.

A recession is defined as happening when a country experiences two consecutive quarters of negative GDP growth, which the Atlanta Fed is signaling could happen to the US.

Last night, Donald Trump gave the green light for 25 per cent tariffs on imports coming in from Canada and Mexico, as well as an extra 10 per cent tariff on China.

Furthermore, the US President is targeting specific industries with an expansion of steel and aluminum tariffs and extra tariffs on motor vehicles and motor vehicle parts.

Responding to the leader of the free world’s markets, global stock markets to drop sharply, with the Dow Jones, S&P 500 and Nasdaq all plummeting.

Former Trump advisor Anthony Scaramucci warned American taxpayers that tariffs are a “tax on consumers” which will impact the economy.

Speaking at the Bitcoin Investor Week Conference, he said: “I don’t think this sort of blanket approach is the right way to do it, and I think he’s [Trump] is going to put us into a recession, frankly.”

These concerns by the ex-Trump aide have been echoed by titans of Wall Street, including Berkshire Hathaway CEO Warren Buffett.

Buffet told CBS News: “Tariffs are actually — we’ve had a lot of experience with them. They’re an act of war, to some degree.

“Over time, they are a tax on goods. I mean, the Tooth Fairy doesn’t pay ’em! And then what? You always have to ask that question in economics. You always say, ‘And then what?”

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Trump has pledged to make tariffs central for his agenda

REUTERS

According to analysis from EY’s chief economist Greg Daco, the United States’ GDP is expected to contract by 1.5 per cent in 2025 if tariffs are implemented in full.

An additional 2.1 per cent fall in gross domestic product is likely to occur in 2026 thanks to Trump’s trade war, Daco reports.

The economist noted that the ta on imports would “dampen” consumer spending and business investment in the world’s largest economy.

In an additional blow to consumers, the consumer price index (CPI) Inflation rate would increase by about 0.7 per cent in the first quarter.