Tariff Chaos Raises Global Recession Fears

Just three months ago, economists across nearly 50 economies predicted a healthy pace of global growth. That optimism has been quickly derailed by US President Donald Trump’s aggressive tariff strategy, including a sweeping 10% blanket duty on all US imports and a staggering 145% tariff on Chinese goods. The global economy now faces a sharply rising risk of recession, economists warn.

A Reuters poll conducted in April paints a stark picture: a majority of over 300 economists said Trump’s tariffs are denting business sentiment and shaking financial markets. None believed the tariffs had a positive impact; 92% said they were negative, while only 8% described the effect as neutral—mainly economists based in emerging markets like India.

The fallout has been swift and severe. Trillions of dollars in global stock market value have been wiped out, and investors’ traditional faith in US assets as a safe haven has been severely undermined. “It’s hard enough for firms to think about July where they don’t even know what the reciprocal tariffs are,” said James Rossiter, head of global macro strategy at TD Securities. “Try and plan another year or five years down the road — who knows what it looks like.”

Facing surging costs and unpredictable trading conditions, global businesses have slashed revenue forecasts or withdrawn guidance altogether. Reflecting this, three-quarters of economists surveyed cut their 2025 global growth forecasts, lowering the median estimate to 2.7% from 3.0% projected in January. That’s even below the International Monetary Fund’s latest forecast of 2.8%.

Forecasts were downgraded for 28 of the 48 economies surveyed. Only 10 economies, such as Argentina and Spain, saw slight upgrades—mostly driven by local factors rather than any global momentum. Looking ahead to 2026, economists expressed little hope for a strong recovery, suggesting the damage from tariff wars could linger for years.

The threat of a global recession is now very real. Sixty percent of respondents said the risk of a recession this year is “high” or “very high.” Only 40% said it was “low,” and just a handful believed it to be “very low.”

“It’s a very difficult environment to be optimistic about growth,” said Timothy Graf, head of macro strategy for Europe, the Middle East, and Africa at State Street. “Even if tariffs were removed today, significant damage has already been done—not just to trade flows but to the US’s credibility in global agreements from trade to defense.”

Adding to the concern, economists warn that Trump’s tariffs could reignite inflationary pressures just as central banks were gaining ground in taming the worst global inflation surge in decades. The cost of goods is expected to rise, eroding real incomes and hurting consumer demand, thus raising the risk of stagflation—a damaging mix of stagnant growth, high inflation, and rising unemployment.

According to the poll, most major central banks will miss their inflation targets this year. Of the 29 major central banks surveyed, 19 are expected to fall short of their goals in 2025, and even by 2026, 15 are still projected to miss.

Global economic prospects have darkened considerably—and even if the tariff battles ease, the path to recovery looks long and uncertain.

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