Trump's Tariffs Threaten U.S. Economy with Recession Risk

The U.S. economy could face a recession if President Trump's new tariffs persist, according to Barclays and BofA Global Research. Economists warn of increased inflation and GDP reduction. While Barclays forecasts rate cuts by the Federal Reserve, BofA suggests significant cuts amid recession.

The U.S. economy is under the looming threat of recession, fueled by President Donald Trump's recent tariffs, according to assessments from Barclays and BofA Global Research.

On Wednesday, Trump rolled out a 10% baseline tariff on all U.S. imports and heightened levies on numerous other nations. BofA economists, led by Claudio Irigoyen, caution that these tariffs could escalate inflation by 1-1.5 percentage points and similarly decrease GDP, nudging the economy towards a recession.

Barclays warns of a 'high risk' of recession for the world's largest economy, projecting a 0.1% contraction by the end of 2025 while maintaining its outlook for two 25 basis point rate cuts by the Federal Reserve. In contrast, BofA stands firm with no rate cut predictions but suggests that in a recession scenario, the U.S. central bank could cut rates by 200 basis points or more.

(With inputs from agencies.)