‘Trumpcession’ coming? Economists warn as $4 trillion wiped out from markets after Trump’s trade salvo backfires

Wall Street has taken a beating. The Dow Jones Industrial Average fell 1.5% on Monday, while the S&P 500 tumbled 2.4%. The sell-off was mirrored across Europe, with London’s FTSE 100 down 0.9%, Germany’s DAX slipping 1.7%, and France’s CAC dropping 0.9%. Investors are spooked, and for good reason—economists are warning that the risk of a US recession is rising.

Goldman Sachs raised its odds of a recession from 15% to 20%, while J.P. Morgan Chase put it even higher at 40%. "The threat of a recession is real. It’s a threat you cannot ignore," said Olu Sonola, head of US regional economics at Fitch Ratings.

Tariffs and Uncertainty: Trump’s Gamble with the Economy

President Trump’s unpredictable trade policies have been a key driver of market anxiety. The administration imposed 25% tariffs on goods from Mexico and Canada and 10% on Chinese imports, only to delay some of them at the last minute. The back-and-forth approach has left businesses in limbo.


"His flip-flopping on tariffs and his old-fashioned ‘America First’ stance is weighing on consumption and knocking confidence," said Kathleen Brooks of trading platform XTB. Meanwhile, retaliatory tariffs from China and Canada have only worsened the situation.

The ‘R-Word’ is Back

Economists use a simple definition for a recession—two consecutive quarters of economic contraction. While the US hasn’t met that threshold yet, warning signs are flashing.

Consumer confidence is sinking, job growth is slowing, and businesses are cutting investment. Mark Zandi, chief economist at Moody’s Analytics, said his firm now puts the probability of a recession at 35%, calling it "uncomfortably high—and rising."

“We went from a very low probability in January to a realistic possibility just weeks later,” said Stephan Weiler, a former Federal Reserve research officer. "The 'R-word' is popping up all of a sudden."

White House Downplays Fears—But Investors Aren’t Convinced

Despite the market turmoil, the Trump administration remains optimistic. Kevin Hassett, head of the National Economic Council, insisted there were "many reasons to be bullish" about the US economy. He attributed the downturn to "temporary blips" and argued that tax cuts would soon boost real wages and investment.

Trump himself declined to rule out a recession but framed it as a "period of transition." Speaking to Fox News, he said, "It takes a little time, but I think it should be great for us."

However, not everyone is convinced. Citi analysts downgraded their outlook for US stocks, arguing that the economy may no longer outpace the rest of the world. “Now, his actions represent the harbinger of doom,” said Dan Coatsworth, investment analyst at AJ Bell in London.

What Would a Recession Mean for Everyday Americans?

If a recession does hit, the consequences could be severe. Millions could lose their jobs, businesses could fold, and the national debt could spiral further. "Recessions are bad," said Zandi. "People lose jobs, income, and wealth."

Consumer spending accounts for about 70% of the US economy. If households cut back to protect their finances, the slowdown could become self-perpetuating. "That’s the biggest fear," Sonola warned. "People start saving instead of spending, businesses stop investing, and the economy grinds to a halt."

The coming months will be crucial. If Trump’s tariff war escalates and uncertainty continues, a recession could become a self-fulfilling prophecy. But if businesses and consumers regain confidence, the US economy may yet dodge the downturn.

For now, though, investors are on edge, markets are shaky, and the future remains uncertain. The ‘R-word’ is back—and it’s not going away anytime soon.