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.
President Donald Trump pledged to encourage production of electricity at U.S. coal plants as he continued his push for cheap energy to combat inflation while dismissing environmental concerns.
“After years of being held captive by Environmental Extremists, Lunatics, Radicals, and Thugs, allowing other Countries, in particular China, to gain tremendous Economic advantage over us by opening up hundreds of all Coal Fire Power Plants, I am authorizing my Administration to immediately begin producing Energy with BEAUTIFUL, CLEAN COAL,” Trump said in a social media post late Monday.
Trump also said this week the U.S. isn’t anticipating any exemptions on major tariffs set to go into effect next month despite fears the tariffs could drive up prices, fuel a recession and push stock prices lower.
Trump told reporters Sunday that 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 additional tariffs will kick in on April 2, which he called a “liberating day.”
While stocks have been volatile in the last few weeks, they rallied for a second straight session on Monday, shrugging off concerns of a recession after Treasury Secretary Scott Bessent wouldn’t rule one out. Bessent’s comments came after Trump himself declined to weigh in on the possibility of a recession this year, telling Fox’s Maria Bartiromo earlier this month “I hate to predict things like that.”
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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 are affected by tariffs.
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 and Zachary Schermele
Contributing: Medora Lee