Another wave of tariffs from President Donald Trump is coming this week and could further hit the market.
The White House confirmed that Trump’s trade policy will take effect immediately after unveiling it on Wednesday, April 2. The plan includes sweeping “reciprocal tariffs” on imported goods, targeting “all countries” that impose duties on U.S. exports.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰💵
The announcement comes as the U.S. economy already showed signs of trouble, and Wall Street’s economists are sounding the alarm toward a recession.
The S&P 500 and the Nasdaq Composite indexes have wiped 4.85% and 10.34% year-to-date, respectively.
“Things are sure to get worse,” analyst warns
Mark Zandi, chief economist at Moody’s Analytics, said he now sees a 40% chance the U.S. will fall into a recession this year—nearly triple his estimate from January.
“Last week’s economic data were disconcerting,” Zandi said in an X post, pointing to a slide in consumer confidence, weak retail spending, and persistently high inflation.
I’m raising my odds that a recession will begin sometime this year to 40%, up from 15% at the start of the year. Last week’s economic data were disconcerting, including the slide in consumer confidence, punk consumer spending, and persistently high inflation. The intensifying…
— Mark Zandi (@Markzandi) March 30, 2025
Zandi’s major concern is the escalating trade war. Last week, the White House announced a new round of steep tariffs on imported vehicles, which triggered swift retaliation from major trading partners.
“With last week’s announcement of big tariff increases on vehicle imports and the coming reciprocal tariffs, things are sure to get worse,” Zandi said.
Before that, President Donald Trump had already imposed a series of aggressive trade policies, including tariffs on goods from China, Canada, and Mexico.
Related: Jamie Dimon sends curt 6-word response to tariff war
The federal spending cuts under the Deficit Offset Growth Enforcement (DOGE) Act also add to the pressure. The spending cuts are designed to curb long-term deficits, but they are already causing contract terminations and layoffs.
“As long as the tariffs and DOGE cuts continue to mount, so too will the odds of recession,” Zandi warned.
Where is the economy heading?
Still, there are reasons for hope. Zandi pointed out that layoffs remain low, and job and income growth are still positive.
All eyes now turn to this Friday’s March jobs report. Zandi predicts nonfarm payrolls likely rose by around 150,000 last month. “Anything south of 100k would be worrisome, and anything north of 200k would be welcome,” he said.
More Economic Analysis:
Gold’s price hit a speed bump; where does it go from here?7 takeaways from Fed Chairman Jerome Powell’s remarksRetail sales add new complication to Fed rate cut forecasts
However, Zandi also cautioned that the full effects of the trade war and DOGE cuts are unlikely to show up in the data just yet. “It is premature to expect much fallout from the trade war and DOGE cuts in the jobs data.”
Year to date, the S&P 500 and the Nasdaq Composite indexes have wiped 4.85% and 10.34%, respectively.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
