I’m an Economist: Here’s Why I Believe Trump’s Economic Moves May Lead to a Recession
Written by
Kerra Bolton
Edited by
Amber Barkley
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President Donald Trump’s aggressive economic policies, including sweeping tariffs and confrontational trade strategies, are raising alarms among economists about a potential recession.
GOBankingRates spoke to economists about the risks associated with Trump’s moves that may lead to recession.
Early Warning Signs
Economists say the clearest signs of recession often show up in overlooked places. These lagging indicators suggest that while prices may remain high, the real economy is already slowing down beneath the surface.
One thing to watch is freight volumes — less cargo coming in and high prices on the shelf could indicate front-loaded inflation with more negative economic impacts to come.
Another early warning sign is an uptick in business credit usage. Smaller businesses that run out of liquidity to cover their expenses sometimes turn to credit just to cover their operating costs. If they can’t catch up, this lack of liquidity can lead to job cuts.
Escalating Tariffs Strain Stability
President Trump’s aggressive stance on tariffs led to a 0.3% contraction in the U.S. economy during the first quarter of 2025, marking the first decline in three years.
“The tariffs are upending the global trading system and current manufacturing chains that have generated tremendous prosperity for the U.S. and helped promote widespread affordability until the recent inflation surge,” said Wayne Winegarden, an economist at the Pacific Research Institute. “The interruption to this trading system will diminish the long-term growth potential of the U.S.”
Erratic Decisions Erode Confidence
Trump’s unpredictable shifts in economic policy and sudden reversals on imposing sweeping tariffs have created an uncertain climate for businesses and investors.
“While there are issues and imbalances in the global system that need to be addressed, the problem with the current administration’s policies is an inherent inconsistency among the different objectives they seemingly want to achieve,” said Davide Accomazzo, a finance instructor at Pepperdine University’s Graziadio Business School.
Accomazzo continued, “Trying to lower inflation is inconsistent with high tariffs, and a lower dollar is inconsistent with the need to stabilize the bond market and guide interest rates lower.”
Escalating Global Tensions
Trump’s imposition of tariffs up to 145% on Chinese imports has triggered a retaliatory response from Beijing, including 125% tariffs on U.S. goods and restrictions on critical mineral exports.
“Taking on a global, rising power like China on trade issues, by first, alienating all of America’s historical allies also would seem inconsistent,” Accomazzo said. “Additionally, the implementation of the strategy has lacked coordination and coherence.”
In, addition Winegarden said Trump’s approach to trade agreements undermines the trust necessary for markets to work efficiently and doesn’t solve the problem American voters may think it does.
“The biggest misconception is this idea that the trade deficit means the U.S. is being ripped off,” Winegarden said. “The economically destructive tariffs that are creating so much economic and financial volatility are a direct result of this misconception. All of this is unnecessary and is a policy-created mistake.”
Volatile Prices Undermine Confidence
Trump’s unpredictable economic policies, characterized by abrupt tariff implementations and frequent policy reversals, have created a climate of uncertainty that hampers business planning and investment.
This instability has led major corporations, including General Motors, UPS and Procter & Gamble, to withdraw or revise their financial forecasts, signaling a lack of confidence that could precipitate a broader economic downturn.
“If all the announced policies are ultimately put into action, a deep recession is unavoidable,” Accomazzo said. “However, even if only bits and bits and pieces of this strategy are implemented, the constant uncertainty creates lasting damage.”
He explained, “Corporations and consumers will be more cautious with negative consequences on consumption and jobs. Inflation could remain higher for longer if some of the tariffs around the world stick.”
Misguided Economic Focus
Trump’s economic strategy has emphasized broad tariffs and confrontational trade measures while overlooking critical domestic challenges such as affordable housing, healthcare costs and labor market disparities.
Economists warn that this misalignment may exacerbate economic vulnerabilities, as the administration’s focus on external trade conflicts diverts attention from pressing internal issues that are essential for sustainable growth.
“America should focus on high-level manufacturing and sophisticated services,” Accomazzo said. “The future is in AI and new energy, not making sneakers.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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Sources
- Wayne Winegarden, Pacific Research Institute
- Davide Accomazzo, Pepperdine University
