The US economy appears likely to enter a recession if current tariffs remain in place, according to experts. However, the severity and timing of a potential downturn are uncertain. Goldman Sachs forecasts GDP growth of 0.5% this year, avoiding a full-blown recession but narrowly so.
To achieve this growth rate, the company assumes a 15 percentage-point increase in tariffs, lower than the current 20 percentage-point level. If those stay in place, Goldman expects a mild recession with GDP growth of 0%.
The last mild recession in the US occurred in 2001, following the dot-com bust. This scenario is similar to what some forecasters predict for this year, citing the ongoing impact of high tariffs on trade and corporate investment.
“The future is murkier now than at any point since 2020,” notes portfolio manager Pramila Agrawal. “We are coming from strength,” but uncertainties surrounding global trade and economic indicators make it challenging to accurately model the effects of these tariffs.
The White House may decide to ride out a potential recession if it emerges early in the electoral cycle or is shallow enough, according to experts. However, this assumption relies on factors like Trump’s ability to negotiate tariffs with other countries and the Federal Reserve’s willingness to cut interest rates.
High tariffs have already had significant effects, such as delaying corporate investment decisions and reducing imports. The degree to which Chinese exports enter the US market via lower-tariffed countries remains an unknown.
For now, the consensus is for weak growth this year or a mild recession. However, a major downturn similar to 2008 or 2020 remains unlikely without a significant shock to the global economy.
Source: https://www.axios.com/2025/04/09/recession-economy-trump-tariffs