What Economic Experts Are Predicting About Trump’s Tariffs

Donald Trump has cemented tariffs as a cornerstone of his second-term strategy, rolling out a wave of taxes on both adversaries and allies under the banner of his “America First” ideology. 

 

The former president is now hinting at an even broader tariff push, pledging new reciprocal taxes on most of the United States’ trading partners this week to mark what he calls the country’s “Liberation Day.” However, financial institutions are voicing serious concerns, warning that this escalating trade war could hurt the broader economy—and possibly trigger a recession.

 

Here’s how economists and financial experts are reacting.
 

Goldman Sachs says there is now a 35 percent chance of recession

One of Wall Street’s leading investment firms is cautioning its clients that the likelihood of a U.S. recession is rising. According to CNN, Goldman Sachs has revised its internal forecast to reflect growing economic risks:

The Wall Street bank warned clients Sunday night that it now sees a 35% chance of a recession in the next 12 months, up from 20% previously. Goldman Sachs also increased its inflation estimate, slashed its 2025 GDP forecast to just 1% and bumped up its year-end unemployment rate outlook by 0.3 percentage points to 4.5%. The bank explained its reasoning in a report, citing, in part, “statements from White House officials indicating greater willingness to tolerate near-term economic weakness in pursuit of their policies.”
 

Tariffs could lead to stagflation — but could have positive affects

Speaking on CNBC’s Squawk Box Tuesday, Allianz’s chief economic adviser Mohamed El-Erian laid out two potential paths resulting from Trump’s tariffs. Either the impacted countries move quickly to adopt a fairer trade framework, or they retaliate with tariffs of their own—potentially setting off a chain reaction that ends in stagflation.
 

Mark Zandi at Moody’s Analytics says Trump is providing “fodder for an economic downturn”

Moody’s Analytics chief economist Mark Zandi shared via social media that he’s now placing the odds of a recession at 40 percent, up from 15 percent earlier this year. While he noted that the broader risk of recession remains low, he called recent economic signals “disconcerting” and pointed to shifting White House policies as a concern.

“The intensifying trade war and DOGE cuts are behind all this and with last week’s announcement of big tariff increases on vehicle imports and the coming reciprocal tariffs, things are sure to get worse,” he said.

 

Zandi elaborated during an interview with ABC News on Monday, saying investor anxiety is growing as Trump shows no signs of walking back his proposed tariffs. “That’s the fodder for an economic downturn. Obviously, that’s not good for business. That’s not good for profits. That’s not good for stock prices,” Zandi said.

 

He warned that the looming auto tariffs could hurt consumers with rising vehicle prices and hit car dealerships just as hard. “Even though the domestic automakers may grab market share — because the tariffs are harder on countries that are exporting to the U.S. — the fact is that we’re going to sell, overall, fewer cars. That means the folks at auto dealerships are going to have less cars to sell, and that’s going to mean less jobs,” he said.

As the ripple effects of these tariff policies begin to take shape — from soaring car prices to rising inflation and stalled economic growth — it’s clear that the stakes are higher than ever.

 

What we’re witnessing isn’t just economic turbulence; it’s a direct threat to the financial stability and freedom of everyday Americans.  

 

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