Could President Trump’s tariffs spur a recession?
An economist warns consumers about a potential economic downturn with President Donald Trump’s trade war continuing.
The Trump administration plans to offer nations a proposed tariff rate based on their existing rates, non-tariff trade restrictions, and other considerations, as well as allowing negotiations concerning the “tariff wall,” U.S. Treasury Secretary Scott Bessent announced on Tuesday.
“On April 2, each country will be assigned a rate that we believe reflects their tariffs,” Bessent mentioned in an interview with Fox Business Network. “For certain countries, it might be relatively low, while for others, it could be quite substantial.”
President Donald Trump has indicated that the “reciprocal tariffs” will be implemented starting April 2 to counteract what his administration views as unfair trade practices. Bessent noted that the tariffs aim to safeguard the U.S. economy, including its workforce and industries.
“We will approach them and say, ‘Here’s our assessment of the tariff levels, non-tariff barriers, currency manipulation, unfair funding, and labor suppression; if you address these issues, we will refrain from imposing a tariff wall,'” Bessent explained in reference to trading partners.
Developments:
∎ In a rare public statement, Supreme Court Chief Justice John Roberts remarked that “impeachment is not an appropriate response” after Trump proposed such actions against a federal judge who ruled against the administration’s attempts to rapidly deport alleged Venezuelan gang members.
∎ In another setback for the Trump administration in court, a federal judge in Washington, D.C., temporarily blocked the enforcement of the president’s executive order prohibiting transgender individuals from serving in the military while the decision is contested by 20 current and aspiring service members.
∎ Trump dismissed two Democratic commissioners from the Federal Trade Commission, Alvaro Bedoya and Rebecca Kelly Slaughter, raising questions about the autonomy of regulatory bodies, a move that might face legal challenges similar to recent executive actions. Bedoya and Slaughter have claimed the dismissals are unlawful.
∎ Trump issued a memorandum on Tuesday to halt hiring for foreign policy roles based on principles of diversity, equity, and inclusion, as outlined by the White House.
∎ The World Health Organization warned that decreases in global health project funding from countries like the U.S., which suspended foreign aid under Trump, might jeopardize vaccination initiatives against severe diseases such as measles and AIDS. Trump had previously withdrawn the U.S. from the WHO at the start of his tenure.
A judge in Maryland stated that Elon Musk’s Department of Government Efficiency likely acted unconstitutionally in multiple ways when it abruptly disbanded the U.S. Agency for International Development (USAID) and has restricted the agency from terminating any more employees or contracts.
Judge Theodore D. Chuang noted that the expedited layoffs and contract cancellations deprived Congress of its constitutional authority to determine the timeline and method for closing down an agency established by Congress.
More than two dozen former employees or contractors of USAID have filed a civil lawsuit against Musk and DOGE, contesting their terminations. Chuang ordered Musk and DOGE to restore email and payment system access for all current USAID staff while he continues to evaluate the case for a final decision.
− Aysha Bagchi
An independent nonprofit organization, funded by Congress to promote conflict prevention and resolution globally, is currently facing challenges from Trump and Musk’s DOGE.
DOGE personnel, accompanied by members of the Washington Metropolitan Police Department, entered the U.S. Institute of Peace building during a dramatic confrontation after being denied access the previous Friday and were informed that the agency is not part of the executive branch.
Trump has been attempting to dismantle the institute, which was established by Congress in 1984 with the mission of “safeguarding U.S. interests by assisting in the prevention of violent conflicts and the facilitation of peace agreements abroad,” according to its website.
Upon their return on Monday with law enforcement, DOGE officials evicted USIP representatives, prompting the latter to contact police to report a break-in. White House spokesperson Anna Kelly stated that USIP had not adhered to Trump’s directive to reduce operations issued in February.
Most of the USIP board, alongside CEO George Moose, were dismissed by the Trump administration, an action Moose is contesting. He informed reporters that his organization has been in communication with administration representatives for weeks, insisting that the agency does not fall under their jurisdiction.
“We are a private, nonprofit corporation in Washington, D.C., thus not a federal agency, therefore the federal government has no right to enter and take control of our premises,” Moose stated.
The Trump administration recently contemplated but ultimately discarded a proposal to simplify the process of establishing new tariff rates for numerous nations by categorizing them into three distinct tariff tiers, as reported by the Wall Street Journal.
The Journal indicated, citing insiders from policy discussions, that the possibility of classifying duty levels as low, medium, and high was discussed during a meeting that included Commerce Secretary Howard Lutnick.
Nonetheless, the procedures remain dynamic as Trump’s administration strives to devise tailored tariffs for each country, and the Journal noted that developing reciprocal tariffs unique to each nation could extend over several months.
The federal government has initiated the reinstatement of over 24,000 probationary workers who were let go prior to a federal judge’s ruling declaring the broad initiative to reduce government employment unconstitutional.
District Judge James K. Bredar issued a temporary restraining order last week mandating that the Trump administration restore federal probationary workers fired on or after January 20. Bredar asserted that officials did not adhere to proper procedures for the layoffs and were dishonest in attributing the terminations to “performance” factors. The challenge was brought forth by the attorneys general from 19 states and the District of Columbia, all of whom are Democrats.
A late filing in a federal court in Maryland on Monday indicated that efforts to reinstate the employees are progressing, despite the “considerable challenges” this process poses for the agencies and personnel. The filing disclosed that all reinstated employees will need to re-enter the lengthy onboarding procedure. Many of those brought back are currently on paid administrative leave.
The Treasury Department is leading in the reinstatement process with 7,613 probationary workers being brought back; the Internal Revenue Service comprises 7,315 of that number. Following this, the Department of Agriculture is reinstating 5,714 previously dismissed workers, while the Department of Health and Human Services is restoring 3,248 employees.
Despite these setbacks, Trump and the Musk-led DOGE continue pursuing measures to reduce the federal workforce, which currently exceeds 2 million employees, by abolishing the Education Department and significantly cutting funding to several federal agencies.
Trump has expressed intentions to promote electricity production at U.S. coal plants as part of his ongoing strategy for affordable energy amidst inflation, while minimizing environmental issues.
“After enduring years under Environmental Extremists, Lunatics, Radicals, and Thugs, allowing other countries, particularly China, to gain significant economic leverage over us by launching numerous coal-fired power plants, I am directing my administration to promptly commence energy production using BEAUTIFUL, CLEAN COAL,” Trump announced in a social media post late on Monday.
During a recent speech, Trump stated he would consider a plan to distribute $5,000 stimulus checks to taxpayers in the form of a “DOGE dividend,” which would be sourced from 20% of savings identified by DOGE. This idea was proposed by Azoria investment firm CEO James Fishback on Musk’s social media platform X, to which Musk responded, “Will check with the President.”
In a recent interview with NewsNation, Fishback emphasized that merely identifying waste and fraud is insufficient; he argued that the government should “refund taxpayers their hard-earned money when their funds have been wasted or misappropriated.” He advocates for checks to be distributed only to households that are net-income taxpayers — individuals who contribute more in taxes than they receive back. Read more here.
− Maria Francis
Trump also indicated this week that the U.S. does not expect any exemptions on significant tariffs set to be enforced next month, despite concerns that these tariffs could increase prices, incite a recession, and depress stock prices. He affirmed that the 25% tariffs on all steel and aluminum imports into the U.S. that commenced last week are permanent, with additional tariffs set to be applied on April 2.
While stock prices have fluctuated considerably over the past few weeks, they experienced a second consecutive rally on Monday, dismissing recession fears, although Bessent did not exclude the possibility of a recession. His comments followed Trump’s reluctance to comment on the likelihood of a recession this year when he told Fox’s Maria Bartiromo earlier this month: “I hate to predict situations like that.”
Here’s how tariffs would make products more expensive
Tariffs will be a critical aspect of the Trump administration’s trade policy. So, what are they, and how do they function?
A tariff is a type of tax applied to imports from foreign nations. Economists generally agree that trade barriers lead to increased consumer prices and adversely affect economic growth and personal income, according to the Tax Foundation, a nonpartisan tax policy organization.
While tariffs increase demand for domestic manufacturers, those companies also participate in the global supply chain and are thus impacted by tariffs.
Trump has stated that his reason for enforcing tariffs is to seek assistance from China, Canada, and Mexico in reducing the flow of migrants and illegal drugs into the U.S. The President has maintained that these nations have not done enough to tackle what he perceives as fundamental issues for his administration.
– Kinsey Crowley and Jonathan Limehouse
Trump has refrained from commenting on whether he believes his extensive tariff strategy could exacerbate the risk of a recession. However, the looming threat of tariffs and the continuing rise in the cost of everyday goods are causing unease about the economic outlook.
A recession could occur if unemployment increases, large corporations experience declining profits, stock market values decrease, and home prices fall, according to the International Monetary Fund.
Typically, a recession is identified by a sustained economic downturn lasting several months or longer. Even when a recession is confirmed by experts and officials, there can be disagreement on its starting and ending points.
− Damon C. Williams and Zachary Schermele
Contributing: Medora Lee; Reuters
