Wall Street Warns of Imminent Downturn If Trump Doesn’t Blink on Tariffs

Wall Street’s recession sirens are blaring. The latest update from the Forbes Recession Tracker reveals a dramatic spike in forecasts for a U.S. economic downturn, with Goldman Sachs and JPMorgan Chase leading the alarm bells—both warning that a recession is likely by year-end if President Trump refuses to walk back his global tariff blitz.

“If the tariffs remain in place at current levels, we now project a recession by Q4,” JPMorgan’s chief economist Michael Feroli said in a note Monday. “There’s no longer any room for doubt.”

Odds of Recession Soar

According to the tracker, recession odds have now climbed to 68%, up from 35% just one week ago. The increase comes after Trump’s “Liberation Day” tariff rollout, which imposed 10% base tariffs on nearly every U.S. trading partner, with additional levies as high as 54% on China, 24% on Japan, and 20% on the EU—set to go into full effect this week.

Wall Street Reaction: Panic and Pain

🔻 The S&P 500 has now shed over $5 trillion in market value since the tariffs were announced.
🔻 The Nasdaq is officially in bear territory, down more than 20% from its peak.
🔻 Bond yields are collapsing, and oil prices have plunged, signaling recession fears are spreading across asset classes.

“This is the biggest self-inflicted economic blow since the 1930 Smoot-Hawley tariffs,” said one strategist at Wells Fargo. “And the world is watching in horror.”

Trump Holds the Line

Despite the warnings, Trump shows no signs of backing off. In a string of Truth Social posts, he framed the market chaos as “short-term pain for long-term gain” and labeled the economic fallout as “growing pains of a historic economic reset.”

“The tariffs are the medicine,” Trump wrote Saturday. “It won’t be easy, but the end result will be the greatest economic comeback of all time. We will MAKE AMERICA GREAT AGAIN!!!”

White House Split on Strategy

While Commerce Secretary Howard Lutnick insists the tariffs are non-negotiable, other Trump aides have started signaling openness to talks. Treasury Secretary Scott Bessent confirmed Monday that over 50 countries have contacted the White House seeking tariff relief. Japan, Vietnam, and the EU have already begun discussions, offering concessions in energy, agriculture, and tax policy in hopes of avoiding steep new U.S. duties.

But Press Secretary Karoline Leavitt shot down rumors of a 90-day tariff pause, calling them “fake news.”

What’s Next?

If Trump blinks and begins lifting tariffs in exchange for favorable trade deals, markets could stabilize. But if the president stays the course, economists warn the U.S. could be heading straight into a stagflationary spiral—with rising prices, falling growth, and increasing unemployment.

“The path is clear: either negotiate fast or buckle up,” said Goldman Sachs’ Jan Hatzius. “If the tariffs remain intact for the next quarter, a recession is not a risk—it’s the base case.”

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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Source: Forbes Recession Tracker, Goldman Sachs, JPMorgan, Truth Social, Bloomberg

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