US markets on edge as Trump's sweeping new tariffs spark economic fears

Financial experts warn of economic slowdown as new tariffs disrupt global trade, heightening concerns over inflation, job losses, and market instability in the US

US President Donald Trump is set to unveil a series of broad reciprocal tariffs on Wednesday, aiming to tackle trade imbalances. The move has sparked global concerns as countries around the world brace for potential economic consequences. 

Trump will present his tariff plan at a Rose Garden event attended by his Cabinet. The announcement is scheduled for 4 pm Eastern Time (ET), coinciding with the US market close, or 1.30 am on April 3 in Indian Standard Time (IST). 

Declaring April 2 as ‘Liberation Day’, Trump said that the tariffs would reduce the United States’ dependence on foreign goods. Expanding on his approach, he confirmed that ‘all countries’ would be impacted. “You would start with all countries, so let’s see what happens,” he told reporters, dismissing hopes of a more targeted approach. 

 

A day ahead of the announcement, Trump claimed that India would ‘very substantially’ lower its tariffs. “I think a lot of (countries) will drop their tariffs because they have been unfairly tariffing the United States for years,” he said. The White House later pointed out that India imposes a 100 per cent tariff on US agricultural products. 

Earlier, Trump imposed a 25 per cent tariff on auto imports, following similar levies on steel and aluminium in March. In response, several nations have signalled plans for retaliation. European Commission chief Ursula von der Leyen stressed the EU’s preference for a negotiated resolution but warned that ‘all instruments are on the table’. Meanwhile, China, Japan, and South Korea have agreed to coordinate their response to the US tariffs, according to Chinese state broadcaster CCTV.  ALSO READ | When and where to watch Trump's tariffs announcement in India: Details

 

Recession risks amid expanding trade war  

Leading financial institutions are raising concerns that Trump’s escalating trade war could have serious consequences for the US economy, potentially triggering a recession.  

 

Goldman Sachs raises recession probability to 35%

Goldman Sachs has revised its economic outlook, increasing the likelihood of a recession within the next year from 20 per cent to 35 per cent. The Wall Street giant cited the impact of tariffs and shifting economic policies as key factors in its updated forecast, according to a report by CNN. 

The firm also adjusted other economic indicators: inflation projections were raised, the 2025 GDP growth forecast was lowered to just 1 per cent, and the year-end unemployment rate estimate was increased by 0.3 percentage points to 4.5 per cent. In its report, Goldman Sachs attributed these revisions partly to statements from White House officials suggesting a greater willingness to endure short-term economic difficulties in pursuit of broader policy goals.  

 

S&P Global predicts economic slowdown

A report from S&P Global also highlights the negative effects of tariffs, leading to downward revisions in US GDP growth projections. “US tariff effects and spillovers from a steeper decline in US sequential growth” are contributing to the slowdown, the firm noted, as quoted by US national daily The Intelligencer. 

While European growth is expected to recover in 2026 after a dip this year, China’s economy remains stable. “The risks to our baseline are firmly on the downside,” the report states, adding that prolonged US policy uncertainty could further weaken demand and slow growth.  

 

CNBC survey: Growth hits post-pandemic low

A CNBC survey of 14 economists suggests the US economy is experiencing its slowest growth since the post-pandemic recovery. “Policy uncertainty and new sweeping tariffs from the Trump administration are combining to create a stagflationary outlook for the US economy,” the survey finds, The Intelligencer reported. 

First-quarter GDP growth is projected at just 0.3 per cent, a significant drop from 2.3 per cent in the fourth quarter of 2024.