The risk of a recession in the US has increased dramatically, with Apollo Global Management’s Torsten Sløk estimating it at 90%. The reason behind this alarming prediction lies in the impact of tariffs on small businesses, which are a crucial pillar of the economy. Trump’s current tariffs could shave as much as four percentage points from US GDP, according to Sløk.
Small businesses account for most employment in the US, with around 110 million jobs created by firms with fewer than 500 workers. They also invest more than large-cap firms, with US private fixed investment reaching $4.2 trillion in the first quarter of 2024. Additionally, smaller companies have historically accounted for a larger share of GDP, making up 44% of the total in 2014.
The threat posed by tariffs is already being felt, with two-thirds of small businesses surveyed in March expecting to be negatively affected by tariffs and trade issues. Sløk warns that if the current level of tariffs continues, a sharp slowdown in the US economy is inevitable.
Source: https://www.businessinsider.com/recession-2025-outlook-economy-downturn-trump-tariffs-china-small-business-2025-4