Introduction

The claim that "tariffs could cause a global recession" has gained traction in recent discussions surrounding U.S. trade policy, particularly under the Trump administration. This assertion is supported by various economic analysts and institutions that warn of the potential negative impacts of increased tariffs on economic growth both domestically and globally. However, the implications of these tariffs are complex and multifaceted, warranting a thorough examination of the evidence and perspectives surrounding this claim.

What We Know

Economic Forecasts: J.P. Morgan recently raised its odds of a global recession to 60%, attributing this increase to the potential economic fallout from U.S. tariffs. They suggest that tariffs could stifle economic growth and lead to higher inflation, which may prompt the Federal Reserve to adjust interest rates accordingly 1 6.
Concerns from Major Banks: Several major banks, including J.P. Morgan, have expressed heightened concerns about the risk of recession due to tariffs. Analysts note that tariffs could lead to increased consumer prices and reduced spending power, which are critical factors in economic performance 2 4.
Inflation and Costs: Reports indicate that tariffs are likely to raise costs for consumers, with estimates suggesting that the average U.S. family could face increased expenses due to higher prices on imported goods 3 4. This inflationary pressure could further dampen economic growth.
Global Economic Impact: A study from UBP suggests that in a scenario of widespread trade conflict, global growth could decline by more than 1 percentage point, with the U.S. economy potentially contracting by 1.7 percentage points 9. This underscores the interconnectedness of global markets and the potential ripple effects of U.S. tariffs.
Mixed Economic Signals: Despite the warnings, some analyses argue that the U.S. economy remains robust, with low unemployment rates and signs of recovery from the pandemic. This perspective suggests that while tariffs pose risks, they may not necessarily lead to an immediate recession 5.

Analysis

The evidence surrounding the claim that tariffs could lead to a global recession is drawn from a variety of sources, each with its own strengths and weaknesses:

Credibility of Sources: J.P. Morgan and other financial institutions are generally considered credible due to their expertise in economic analysis and forecasting. However, it is essential to note that these institutions may have vested interests in promoting certain narratives that align with their business models or client interests. For example, a bank might benefit from heightened market volatility, which could lead to increased trading activity.
Potential Bias: Media outlets like Reuters and NPR provide valuable coverage of economic issues but may also reflect particular editorial slants. For instance, NPR's framing of tariffs as a direct cause of recession could be seen as alarmist, depending on the broader context of economic indicators 2 3.
Methodological Concerns: The methodologies used in economic forecasting can vary significantly. For example, J.P. Morgan's prediction of a 60% chance of recession is based on their proprietary models, which may not account for all variables or alternative scenarios. Similarly, the UBP report's projections are contingent on the assumption of a generalized trade war, which may not materialize 6 9.
Contradictory Evidence: While many sources highlight the risks associated with tariffs, others point to the resilience of the U.S. economy and suggest that the immediate threat of recession may be overstated. This divergence in perspectives indicates that the situation is fluid and influenced by numerous factors, including consumer behavior and global economic conditions 5 10.

Conclusion

In conclusion, the claim that "tariffs could cause a global recession" is assessed as "Mostly True." The evidence presented indicates a significant concern among economic analysts and institutions regarding the potential negative impacts of tariffs on both domestic and global economic growth. Key findings include J.P. Morgan's raised odds of a global recession to 60%, the inflationary pressures that tariffs could impose on consumers, and the potential for a decline in global growth as highlighted by various studies.

However, it is important to acknowledge the nuances surrounding this claim. While many forecasts suggest a heightened risk of recession, some analyses indicate that the U.S. economy remains relatively strong, which complicates the narrative. Additionally, the methodologies used in economic forecasting can vary, and predictions are often contingent on numerous factors that may change over time.

The limitations in the available evidence underscore the uncertainty inherent in economic predictions. The situation is fluid, and while the risks associated with tariffs are real, the immediate outcomes may not be as dire as some forecasts suggest. Readers are encouraged to critically evaluate information and consider multiple perspectives when assessing the potential impacts of tariffs on the economy.