Experts Warn of 2025 US Recession if Trump-Era China Tariffs Remain

The Trump-China tariff tango is once again stealing the economic spotlight, and let’s just say—it’s not the kind of dance the markets enjoy. As the world’s two largest economies continue their trade standoff, Wall Street whispers have turned into full-blown alarm bells. One particularly loud voice in the chorus? Torsten Slok, the Chief Economist at Apollo Global Management, who basically just dropped the economic equivalent of a mic: if these tariffs stick around, the U.S. recession won’t just be a possibility—it’ll be a headline by summer 2025.

Torsten Slok: “Tariffs Stay, Recession Plays”

Appearing on CNBC’s Squawk on the Street, Slok didn’t mince words. He warned that if the current Trump-era tariffs, especially the eye-watering 145% levies on Chinese imports, remain unchanged, the U.S. economy is headed for a hard landing in 2025. And no, this isn’t one of those vague, maybe-we’ll-slow-down kind of forecasts. Slok was crystal clear: “We will absolutely have a recession in 2025 if tariffs stay at these levels.”

To be fair, the warning isn’t coming out of thin air. These tariffs have already been weighing heavily on the supply chain, squeezing businesses, and now—according to Slok—they’re setting the stage for a potential 4% drop in GDP. He even slapped a 90% chance on a two-quarter economic contraction, which in economic lingo is basically saying, “Yep, we’re hitting the recession jackpot.”

While there was a brief 90-day pause on reciprocal tariffs, courtesy of a Trump maneuver that felt more like a press conference than a policy shift, there hasn’t been much movement since. No fresh updates, no new deals—just the same old tariff tension simmering under the surface. And that’s exactly what has economists like Slok pacing the floor like they just binge-watched a season of Black Mirror.

Fed in the Hot Seat—But Still Sitting Pretty

In a perfect world, the Federal Reserve would swoop in like a monetary superhero, slashing interest rates to soften the blow. But alas, Chair Jerome Powell seems to be playing it cool while the economy warms up (and not in a good way). Even Donald Trump, never one to shy away from a microphone, has taken shots at Powell, urging him to cut rates before the economy starts coughing up warning signs like a ’90s dial-up modem.

Yet, here we are—mid-2024—and the Fed is still sitting on its hands. With rate cuts still just a glittery rumor, the fear is that the U.S. will stumble into 2025 unprepared, with inflationary pressures and shrinking growth colliding in a less-than-magical way. Think less “economic soft landing” and more “crash landing with no snacks on board.”

Business Breakdown: The Supply Chain is Feeling the Heat

It’s not just economists sweating it out. The business world is already feeling the sting of these punitive tariffs, and the numbers aren’t pretty. According to a recent Bloomberg report, U.S. cargo shipments have taken a nosedive—down by a staggering 60%. That’s not just a blip on the radar; that’s a nosedive that even Maverick from Top Gun couldn’t pull out of.

Giant retailers like Walmart and Target have started sounding the alarm, warning of potential COVID-level shortages, layoffs, and disruptions in the retail space. If you thought the great toilet paper crisis of 2020 was bad, just wait until supply chains start unraveling again. And it’s not just the big names—small and medium-sized businesses, the lifeblood of Main Street, are especially vulnerable. Torsten Slok predicts a spike in bankruptcies and job losses among these smaller players, with ripple effects that could send shockwaves through the broader job market.

Markets React: From Stocks to Crypto, No One Is Safe

The ripple effect of the Trump-China trade standoff isn’t stopping at manufacturing or retail. It’s reaching all corners of the financial system—from equities and bonds to even the wild west of crypto. While Bitcoin and its altcoin buddies have been showing some bullish signs lately, the uncertainty looming over the U.S. economy could change that faster than you can say “HODL.”

Investor sentiment is already shaky, and if a full-blown recession kicks off in 2025, we could see risk assets get dumped like last season’s NFTs. Gold might shine, but crypto could find itself on a rollercoaster ride that even Six Flags would envy. And with Polymarket now placing a 56% chance of a U.S. recession (and it was 66% just weeks ago), financial forecasters are collectively holding their breath.

FAQ: What You Need to Know About the 2025 Recession Fear

Why is the Trump-China trade war back in the spotlight?

Because those hefty tariffs—some as high as 145%—on Chinese imports are still in place, and they’re starting to drag down economic activity. With no new trade deals or tariff rollbacks announced, the standoff is looking like it’s here to stay.

What is Torsten Slok predicting?

The Apollo economist predicts a 90% chance of a two-quarter economic contraction in 2025 if tariffs remain unchanged. Translation: buckle up for a potential recession.

Is the Federal Reserve doing anything to help?

Not yet. Despite calls from economists and even Donald Trump to cut rates, the Fed has held steady. Whether they’ll act before the economy tips is still up in the air.

How are businesses and markets reacting?

Cargo shipments are down 60%, major retailers are prepping for supply shortages, and small businesses are at risk of layoffs or shutdowns. Meanwhile, markets—from stocks to crypto—are watching nervously.

What does this mean for crypto investors?

Expect volatility. While crypto has shown resilience, a recession could spook risk-averse investors. Keep your eyes on macro indicators and don’t be surprised if things get a little bumpy in your wallet.

Bottom Line: Trade Wars Have No Winners, Just Economic Heartburn

So here we are—staring down the barrel of a potential 2025 recession, all thanks to a tariff standoff that feels more like a geopolitical soap opera than a smart economic strategy. Whether the Fed jumps in or not, and whether trade talks resume or stall, one thing is clear: if the Trump-era tariffs stick, the U.S. economy might just take a tumble.

In the meantime, keep your eyes peeled, your portfolios diversified, and maybe stock up on ramen—just in case.