President Donald Trump’s sweeping tariffs could lead to a deep recession and higher inflation in the US economy. Economists warn that imposing a 20% average tariff on imports would have severe consequences, comparable to the heavy import duties imposed in the 1930s that contributed to the Great Depression.
Mark Zandi, chief economist of Moody’s Analytics, says the most far-reaching version of Trump’s strategy would raise the effective tariff rate to about 20%. If this happens and trading partners retaliate, the US and global economies will suffer serious recessions. However, it’s more likely that officials will agree to carveouts and exceptions for American farmers, reducing the effective tariff rate to 15%.
The new tariffs are expected to reignite inflation, hurting consumer spending, which accounts for 70% of economic activity. This could lead to dampened business confidence, reduced hiring, and investment. Economists predict the Federal Reserve’s preferred inflation measure would increase from 2.8% to 4.8%, causing inflation to reach 4%.
While some economists believe inflation will be smaller due to retailers absorbing costs and consumers substituting goods made in the US or countries with lower tariffs, others warn that this impact may not materialize. The new tariffs are expected to reduce imports, strengthen the dollar, making foreign goods cheaper for Americans, which could offset the negative effects.
Trump announced a 10% tariff on all imports and additional reciprocal fees on 60 countries contributing most to the US trade deficit. These fees are designed to respond to non-tariff trade barriers such as value-added taxes, currency manipulation, and foreign government subsidies.
Source: https://eu.usatoday.com/story/money/2025/04/02/trumps-sweeping-tariffs-recession/82780969007