Experts Warn of Impending US Recession in 2025 Due to Trump-China Trade War, Says Apollo Economist

The current economic landscape is being shaped by the ongoing trade tensions between the United States and China, which analysts suggest could result in a recession for the U.S. in 2025 if tariffs continue at their present levels. Reflecting widespread concerns about the ramifications of this trade war, Torsten Slok, Chief Economist at Apollo Global Management, has expressed a resolute outlook regarding the potential economic downturn.

In a recent appearance on CNBC’s “Squawk on the Street,” Slok indicated that the persistence of high tariffs could trigger a recession in the summer of 2025. He noted, “It’s all dependent on whether tariffs remain fixed at current levels, and if they do, we will almost certainly face a recession in 2025.” His comments underscore a growing sense of urgency among economists regarding the need to address the ongoing trade dispute that has embroiled the two global superpowers since 2018.

The economic ramifications of this trade war have become increasingly pronounced in the U.S. marketplace. The Trump administration’s implementation of a 145% tariff on a broad range of Chinese imports has led to significant economic uncertainty. While a brief 90-day pause in reciprocal tariffs was initially established, the resulting lack of updates on the trade negotiations has only exacerbated fears among market watchers, as they foresee further complications on the horizon.

Slok predicts that without resolution to these tariff conditions, the U.S. gross domestic product (GDP) could conceivably decline by 4%. Worse yet, he positions the probability of an economic contraction occurring across two consecutive quarters at 90%, suggesting that many U.S. businesses could be adversely affected by this protracted conflict. An accompanying report from his firm reinforces the prediction of a recession occurring by summer 2025.

As these concerns mount, experts are increasingly advocating for cuts in interest rates by the Federal Reserve to mitigate the adverse effects of rising tariffs. The criticism levied at Federal Reserve Chair Jerome Powell by former President Trump reflects this sentiment, as the delay in rate adjustments has raised alarm bells regarding the Fed’s ability to act in preventing recessionary pressures. With experts warning that the chances of a stable economy are diminishing, market participants are anxiously awaiting any movement from the Fed.

The trade war’s repercussions extend beyond monetary policy and into the structural integrity of U.S. businesses and supply chains. According to recent assessments, the likelihood of recession has climbed significantly; a report from Polymarket places the probability at 56%, down from 66% earlier in the month. In parallel, JP Morgan has also raised its recession forecasts to 60%, sharing concerns that the economic fabric of various sectors could be unraveled if these tariffs remain in place.

The escalating tariffs have had a tangible impact on various markets, including stocks, bonds, and commodities. Moreover, the ramifications are extending into supply chains, where a recent Bloomberg report highlighted a staggering 60% decrease in cargo shipments, reflecting a major disruption that has not yet fully registered in the U.S. economy. Major retailers like Walmart and Target are bracing for potential COVID-19-like shortages and layoffs, all stemming from the ongoing trade conflict.

Slok warns that smaller businesses, particularly those less equipped to weather economic downturns, may be more vulnerable to bankruptcies and workforce reductions as a result of the tariff landscape. In the upcoming weeks, jobless claims data will serve as a valuable indicator to gauge labor market health and the underlying consequences of the trade war.

This complex interplay between international trade policy, domestic economic health, and the unpredictability of future tariffs continues to generate significant concern among economists and market analysts alike. As various predictions regarding economic recovery fluctuate, the urgency to find a sustainable resolution to U.S.-China trade conflicts grows ever more pressing, with potential implications that could reverberate globally.

With ongoing discussions around inflation, interest rates, and tariff policies, stakeholders across numerous sectors are keeping a watchful eye on how these elements might unfold in the near future. The path to economic stability and growth remains uncertain, necessitating proactive measures from policymakers to stave off a recession.