Could President Trump’s tariffs spur a recession?
An economist warns consumers about a potential economic downturn with President Donald Trump’s trade war pressing on.
The Trump administration intends to set proposed tariff rates based on individual country assessments, including their current rates, non-tariff trade barriers, and other considerations, while also allowing negotiations regarding the “tariff wall,” U.S. Treasury Secretary Scott Bessent mentioned on Tuesday.
“On April 2, each country will receive a figure that we believe represents their tariffs,” Bessent told Fox Business Network. “For some nations, it may be relatively low, while for others, it could be significantly high.”
President Donald Trump stated that the implementation of “reciprocal tariffs” on April 2 will counteract trade practices deemed unfair by his administration. Bessent emphasized that these tariffs aim to protect the U.S. economy, workers, and industries.
“We will approach them and say, ‘Here’s where we estimate the tariff levels are, regarding non-tariff barriers, currency manipulation, unfair funding, labor suppression, and if you cease these practices, we will refrain from imposing the tariff wall,'” Bessent elaborated on trading partners.
The federal government has commenced the reinstatement of over 24,000 probationary employees who were dismissed prior to a federal judge ruling that the broad initiative to reduce the government’s workforce was unlawful.
District Judge James K. Bredar granted a temporary restraining order last week, mandating the Trump administration to reinstate federal probationary employees let go on or after January 20. This case was initiated by the attorneys general of 19 states and the District of Columbia, all Democrats.
A filing made late Monday in a Maryland federal court noted that the reinstatement process for the employees has begun, despite the “significant burdens” it imposes on the agencies and employees. The document indicated that all reinstated employees would need to undergo a lengthy onboarding process.
The Treasury Department leads in bringing back 7,613 probationary workers, with the Internal Revenue Service accounting for 7,315 of them. The Department of Agriculture has reinstated 5,714 previously terminated workers, while the Department of Health and Human Services has brought back 3,248 employees.
Despite this setback, Trump and the Elon Musk-led Department of Government Efficiency are persevering with their plans to reduce the federal workforce of more than 2 million employees by eliminating the Education Department and dramatically cutting various federal agencies.
Trump has vowed to promote electricity production at U.S. coal plants as he continues his push for affordable energy amid inflation, while disregarding environmental concerns.
“After being held hostage by Environmental Extremists, Lunatics, Radicals, and Thugs, allowing other Countries, especially China, to gain a significant Economic advantage by launching hundreds of coal-fired power plants, I am instructing my Administration to immediately begin producing Energy with BEAUTIFUL, CLEAN COAL,” Trump declared in a social media announcement late Monday.
Trump mentioned he is considering a plan to distribute $5,000 stimulus checks to taxpayers in the form of a “DOGE dividend” during a recent speech. He described this as part of a proposal to use 20% of the savings identified by Elon Musk’s Department of Government Efficiency (DOGE) and return it to American taxpayers. This idea was proposed by James Fishback, CEO of Azoria investment firm, on Musk’s platform X, to which Musk responded, “Will check with the President.”
In a recent interview with NewsNation, Fishback stated that it’s insufficient to merely identify waste and fraud, insisting that the government should “refund taxpayers their hard-earned money when their funds have been wasted and misused.” He advocates for checks to be sent exclusively to households that are net-income taxpayers – those who contribute more in taxes than they receive back. Read more here.
− Maria Francis
Trump also remarked this week that the U.S. does not expect any exemptions on major tariffs that are set to proceed next month, despite apprehensions that these tariffs could raise prices, instigate a recession, and lower stock prices. Trump reiterated recently that 25% tariffs on all steel and aluminum imports to the U.S. that went into effect last week are permanent, with additional tariffs to begin on April 2.
While stock prices have experienced fluctuations in recent weeks, they rose for a second consecutive session on Monday, disregarding recession concerns after Treasury Secretary Scott Bessent did not dismiss the possibility. Bessent’s remarks followed Trump’s own dismissal of the likelihood of a recession this year, telling Fox’s Maria Bartiromo earlier this month: “I dislike predicting such things.”
A tariff is a type of tax imposed on imports from foreign nations. Economists largely agree that trade barriers elevate consumer prices and adversely affect economic growth and income, as per the Tax Foundation, a nonpartisan tax policy organization.
Though tariffs can create heightened demand for domestic producers, these companies are also part of the global supply chain and are therefore affected by tariffs.
Trump’s rationale for enforcing tariffs is to solicit assistance from China, Canada, and Mexico in addressing the influx of migrants and illegal drugs into the U.S. The president has asserted that these countries have not sufficiently contributed to resolving what he identifies as core issues for his administration.
– Kinsey Crowley and Jonathan Limehouse
Trump refrains from commenting on whether he believes his extensive tariff strategy could push the country into a recession. However, the impending tariffs and the ongoing rise in everyday costs are fueling concerns about the economic trajectory.
A recession could ensue if an increasing number of people become unemployed, large corporations experience reduced profits, the stock market declines, and housing prices drop, according to the International Monetary Fund.
Typically, a recession is characterized by a prolonged stretch of several months or more of economic decline. Even when a recession is recognized by experts and officials, there is often disagreement on when it began or concluded.
− Damon C. Williams and Zachary Schermele
Contributing: Medora Lee
