Third Global Recession in 20 Years? Trump’s Tariffs Raise Alarm

The global economy may be heading toward another major downturn, with President Donald Trump’s newly announced tariffs posing a serious risk. If these tariffs remain in place—especially if other countries retaliate—the economic impact could rival the financial crisis of 2008-09 and the COVID-19 pandemic of 2020.

A Potential Economic Earthquake

Since World War II, only two events—the 2008 financial crisis and the 2020 pandemic—have caused a severe enough shock to tip the entire global economy into recession. Trump’s new tariff policy, dubbed "Liberation Day," could become the third.

The United States imported $3.3 trillion worth of goods in 2024, averaging over $25,000 per household. With the proposed tariffs reaching an average of 29%, importers would face nearly $1 trillion in additional costs annually. That translates to an extra $7,300 per household. However, experts note that the reality may be even more disruptive. 

Instead of simply paying higher tariffs, many businesses may stop importing certain goods altogether. This could lead to shortages, significant price hikes, and economic strain on American families.

The China Tariff’s Far-Reaching Impact

One of the most significant changes is a 54% tariff on Chinese imports. China is a major supplier of high-tech goods, including iPhones, and also provides affordable products to millions of low-income American families. The higher tariffs could drive up costs, worsening financial struggles for many households.

Beyond the U.S., the impact could be devastating for export-driven economies like China and Germany. A sharp decline in American imports would remove a key driver of the global economy, potentially leading to recessions in these nations as well.

A Fragile Global Economy

For decades, global trade has created an interdependent system, with economies relying on one another for stability. A sudden disruption in U.S. trade could trigger economic slowdowns worldwide.

In 2024, the U.S. exported $2.1 trillion in goods and $1.1 trillion in services. If countries impose retaliatory tariffs, American industries could suffer further, deepening the crisis.

Warnings from Economists

Financial analysts are already warning of the serious consequences of these tariffs.

"This is a game changer for the global economy," Fitch Ratings economist Olu Sonola wrote in a note Wednesday. "Many countries will likely end up in a recession."

According to a report from Axios, JPMorgan analysts echoed the concerns, writing, "These policies, if sustained, would likely push the U.S. and global economy into recession this year."

Market Reaction and Uncertainty

Stock markets responded negatively to the announcement, though the declines were not as steep as some expected. Investors appear to be holding out hope that the tariffs will not be fully implemented or could be reversed.

"One lesson from the first few months of the Trump presidency is you have to let news cure a little before you take it seriously," said Matthew Hougan, chief investment officer at Bitwise Asset Management, as per the report.

The scale of the proposed tariffs is massive, and the economic consequences could be severe. If the policies remain in place and trigger global retaliation, the world could be heading toward a third major recession in just two decades.