Recession coming soon? As Donald Trump unleashes April 2 'Liberation Day' Tariffs, here's what experts are predicting

US President Donald Trump is set to unveil sweeping new "Liberation Day" tariffs on Wednesday, but kept the world guessing until the last minute about the scope of an onslaught that could spark a global trade war.

The US President has had a long love affair with tariffs, insisting in the face of economic experts that they are a cure-all that will tackle America's trade imbalances with friends and foes alike. Critics say that not only will US consumers bear the brunt as importers pass on the cost, but that they could increase the risk of a damaging recession at home and abroad, AFP reported.

Investors in financial derivatives called U.S. inflation swaps are betting that President Trump's tariffs will have a hefty short-term impact on consumer prices that will recede in the next few years as recession concerns escalate, Reuters reported.


Goldman Sachs, in its latest research note, has raised its 12-month recession probability to 35 per cent from 20 per cent, reflecting its lower growth forecast for the fourth quarter, declining consumer confidence, and "statements from White House officials indicating willingness to tolerate economic pain." J.P. Morgan estimates a 40 per cent chance of a recession, the Reuters report says.

"There's an initial, one-time increase in inflation at the price level because firms have to raise prices to offset the impact of tariffs," said Ryan Swift, chief bond strategist at BCA Research.

"But over the medium term, tariffs would actually slow manufacturing activity, which means less demand ... and inflation will end up lower than what it would have been otherwise just because the economy is hurt. It reflects recession expectations," Swift stated.

President Trump has used tariffs as a foreign policy weapon ever since his chaotic first term from 2017-2021. The former property tycoon insists the levies will bring a "rebirth" of America's hollowed-out manufacturing capacity, and says companies can avoid tariffs by moving to the United States.

President Trump's already announced auto tariffs of 25 per cent are due to come into effect on April 3.

A 25 percent tariff on steel and aluminum from around the world came into effect in mid-March. China was hit in March by additional 20 percent tariffs on all goods, triggering retaliatory duties from Beijing. The EU has unveiled its own measures to start mid-April.

FAQs

Q1. Who is President of USA?
A1. President of USA is Donald Trump.

Q2. When will auto tariffs come into effect?
A2. President Donald Trump's already announced auto tariffs of 25 percent are due to come into effect on April 3.