Could President Trump’s tariffs spur a recession?
An economist warns consumers about a potential economic downturn with President Donald Trump’s trade war pressing on.
WASHINGTON – President Donald Trump says he does not intend to create exemptions on sweeping steel and aluminum tariffs and reaffirmed that additional duties will go into effect early next month.
Speaking to reporters aboard Air Force One late Sunday, Trump said the 25% tariffs on all steel and aluminum imported into the U.S. that went into effect last week are here to stay. He added that reciprocal and sectorial tariffs will kick in on April 2, which he called a “liberating day.”
“They charge us, and we charge them,” Trump said, referring to the reciprocal tariffs. “Then, in addition to that, on autos, on steel, on aluminum, we’re going to have some additional tariffs.”
Trump raised steel and aluminum tariffs to a flat 25%, without exceptions, in a move he said will boost domestic industry. After those tariffs were imposed, Canada and the European Union retaliated with countermeasures on U.S. exports.
The back-and-forth has sparked uncertainty that has driven volatility in the stock market and fueled fears of a recession. Adding to those fears, Trump and members of his Cabinet have consistently declined to rule out the possibility of a recession this year.
Here’s how tariffs would make products more expensive
Tariffs will be a big part of the Trump administration’s trade policy. So, what are they and how do they work?
National Economic Council director Kevin Hassett said stock market volatility will persist until at least April 2, when Trump is expected to unveil plans for reciprocal and additional sectorial tariffs.
“Between now and April 2, there’ll be some uncertainty,” Hassett said in an appearance on CNBC’s “Squawk Box.” “But as April comes along, markets will see that the reciprocal trade policy makes a great deal of sense.”
Hassett’s comments come after the S&P 500 and the Nasdaq marked their fourth consecutive weekly declines as Wall Street struggles to keep up with Trump’s changing tariff policies and the sweeping cuts across the federal government by the Department of Government Efficiency.
A 90-day delay on the Trump administration’s plan to lay off temporary researchers at the Department of Veterans Affairs has done little to allay concerns about the fate of medical studies being conducted by the agency.
Trump’s government-wide hiring freeze threatened to wipe out hundreds of studies and clinical trials that are run through temporary VA appointments – scientific partnerships that have seeded landmark medical inventions like the pacemaker and the CAT scan.
Last week the VA confirmed to USA TODAY it was extending some research terms that were set to expire in the next three months by another 90 days. But scientists say there is still plenty of uncertainty about what will happen to important studies and trials funded by the VA’s development and research office.
According to a memo circulated among agency heads and previously reported by USA TODAY, plans call for the VA to lay off nearly 80,000 workers, which lawmakers and advocates fear could devastate the already short-staffed agency.
− Cybele Mayes-Osterman
The European Commission will look into safeguards for its aluminum sector after Trump imposed a blanket 25% tariff on imported steel and aluminum, multiple media outlets reported, citing a steel action plan.
“EU producers lost substantial market share over the last decade and, in addition, around 50% of primary production capacity remains curtailed since 2021,” the draft document said, according to Reuters and the Financial Times. “The recently announced US tariffs on aluminum are likely to worsen the situation further with a significant threat of trade diversion from multiple destinations.”
The action plan, according to the outlets, says the committee will also propose export duties on European scrap metals. The plans are set to be announced Wednesday and could be amended before they are made public.
In response to Trump’s tariffs on metals, the EU announced countermeasures worth $28 billion will take effect April 1 and will be completely rolled out by April 13. European Commission President Ursula von der Leyen said in a statement the EU “will always remain open to negotiation.”
Treasury Secretary Scott Bessent on Sunday said there are “no guarantees” the U.S. will evade a recession, adding to unease and uncertainty regarding the economic impact of the escalating trade war.
In an interview on NBC’s “Meet the Press,” Bessent did not rule out a broad decline in economic activity, saying: “You know that there are no guarantees. Like, who would have predicted COVID, right?”
Bessent, addressing the recent market volatility, said corrections are healthy and added that the U.S. economy will continue to grow down the road.
“I’m not worried about the markets,” he said. “Over the long term, if we put good tax policy in place, deregulation and energy security, the markets will do great.”
EU foreign policy chief Kaja Kallas said European leaders will explore ways to help keep Radio Free Europe/Radio Liberty afloat after the Trump administration said it would cut its funding, but warned it would be difficult. RFE/RL provides news coverage in nearly two dozen countries, many of them under authoritarian rule, but the federal grant agreement that funds its global operations was terminated over the weekend.
“Can we come in with our funding to … fill the void that U.S. is leaving? The answer to that question is … not automatically, because we have a lot of organizations who are coming with the same request to us,” Kallas told reporters Monday. “But there was really a push from the foreign ministers to discuss this and find the way.”
On Friday, Trump signed an executive order placing on leave nearly all employees at the government-funded international news broadcast service Voice of America, which like RFE/RL is overseen by the U.S. Agency for Global Media.
Misha Komadovsky, the White House correspondent for Voice of America, said he and all contractors received emails on Sunday informing them they will terminated effective March 31. Since the executive order was signed, the Voice of America’s broadcasts across the planet have gone silent, and some are replacing the news programming with music.
“The cancellation of Radio Free Europe/Radio Liberty’s grant agreement would be a massive gift to America’s enemies,” said Stephen Capus, the organization’s president and CEO. “The Iranian ayatollahs, Chinese communist leaders and autocrats in Moscow and Minsk would celebrate the demise of RFE/RL after 75 years. Handing our adversaries a win would make them stronger and America weaker.
“We’ve benefitted from strong bipartisan support throughout RFE/RL’s storied history. Without us, the nearly 50 million people in closed societies who depend on us for accurate news and information each week won’t have access to the truth about America and the world.”
Trump’s tariffs and the ongoing trade war will slow growth in the U.S., Canada and Mexico and drive up inflation, the Organization for Economic Cooperation and Development said Monday.
The global economic policy forum said the impacts of the trade war will be felt in Americans’ pockets. Higher prices are likely and an economic slowdown will cut into any financial benefit of the duties, OECD said.
The OECD cut its economic growth forecast to 2.2% for this year and 1.6% for 2026. The previous forecast estimated the U.S. economy would grow by 2.4% in 2025 and 2.1% next year.
The forum’s latest outlook takes into account the additional tariffs Trump has vowed to impose on April 2.
A member of the French Parliament has demanded the U.S. return the Statue of Liberty.
Raphaël Glucksmann, head of the center-left political party Place Publique and a fierce critic of Trump, made the comments to his supporters at a conference on Sunday, according to the Agence France-Presse.
“Give us back the Statue of Liberty,” he said. “We’re going to say to the Americans who have chosen to side with the tyrants, to the Americans who fired researchers for demanding scientific freedom: ‘Give us back the Statue of Liberty.'”
“We gave it to you as a gift, but apparently you despise it,” he added.
A tariff is a form of tax imposed on imports from another country.
Economists generally agree that trade barriers raise consumer prices and negatively impact economic output and income, according to the Tax Foundation, a nonpartisan tax policy nonprofit.
Tariffs create more demand for domestic manufacturers, but those companies are also part of the global supply chain and therefore also impacted by tariffs, experts have previously told USA TODAY.
Trump has said his motivation for implementing tariffs is to get help from China, Canada and Mexico to curb the flow of migrants and illegal drugs into the U.S. The president has insisted the countries have not done enough to help address what he sees as core issues for his administration.
– Kinsey Crowley and Jonathan Limehouse
Trump won’t say whether he thinks his sweeping tariff plan could help push the country into a recession. But the threat of tariffs and the already-increasing costs of everyday items are raising concerns about where the economy is headed.
A recession could happen if more people are out of work, large companies see lower profits, the stock market slips and home prices tumble, according to the International Monetary Fund.
Generally, a recession is marked by an extended period of many months or more of economic downturn. And even when a recession is acknowledged by experts and officials, not everyone agrees on when it started or when it ends.
− Damon C. Williams, Zachary Schermele
Contributing: Reuters
