The probability of the United States to lift into a recession in 2025 have increased while President Donald Trump is intensifying his pricing war, using commercial restrictions as a key negotiation tool in international negotiations.
According to Alec Kersman, director general and head of Asia-Pacific at Pimco, the probability of an American recession this year increased to 35%, against only 15% in December 2024. Speaking at CNBC Converge Live Event in Singapore, Kersman awarded the high risk for the economic effects of Ripple Ripple of Truss pricing policies and recovery measures.
Despite this, Trump remains categorical that prices are necessary to protect the American industries, even if analysts warn that prolonged commercial disputes could push the American economy in a slowdown.
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Economic growth should slow down, but not to collapse
Although fears of recession intensified, Kersman stressed that the basic Pimco scenario still predicts US economic growth from 1% to 1.5% in 2025. This marks a significant slowdown but does not stop at a complete contraction.
“This is a fairly large decrease,” noted Kersman, highlighting the impact of rates on world trade flows.
Some analysts argue, however, that domestic consumption could help compensate for part of the economic slowdown. Kamal Bhatia, president and chief executive officer of principal asset management, said that nationalist expenditure schemes triggered by prices could encourage more Americans to buy goods produced in the country, stimulating internal economic activity.
Fuel trade rates, increasing global economic uncertainty
Trump has increasingly armed the prices as a central pillar of his economic strategy, saying that they give the American lever effect on business partners. This approach has deepened trade tensions around the world, with countries now ready to retaliate rather than conceded.
One of the last escalations occurred on Tuesday when Trump announced its intention to double the prices on Canadian steel and aluminum imports to 50%. This decision was a direct response to the overload of 25% of Doug Ford of Ontario on electricity exports to Trump’s action in the United States sent undulations to the North American market, Canadian officials threatening off-measures if the increase in the rate was implemented.
However, following the last -minute negotiations, Ford suspended surcharge after concluding an agreement with the US Secretary of Commerce Howard Lunick to restart commercial discussions. In response, Trump temporarily withdrew his tariff hiking plans – a sign that he is ready to adjust his tactic in the face of a strong decline.
However, the situation as a whole suggests that the tariff war is far from over. Several other key American business partners, including China and the European Union, have shown their desire to retaliate, noting that Trump’s aggressive position will continue to cause new economic conflicts.
China, which remains the main target of Trump’s trade policies, has slapped prices on American agricultural products and the main manufacturing components in retaliation for American restrictions. Despite several cycles of negotiations, the two countries remain locked in an prolonged economic confrontation. The European Union has also warned of countermeasures if Trump proceeds at its prices on European cars and technological products. European leaders have stressed that the United States should not expect unilateral compliance, and the EU is ready to respond with prices on American products, including whiskey, motorcycles and textiles.
Mexico, another great American trading partner, previously imposed reprisals on pork, American cheese and bourbon in response to the previous steel and aluminum tasks of Trump. Mexican officials have suggested that if new commercial restrictions are emerging, they will not hesitate to retaliate again.
The current pricing battles have triggered uncertainty in the world markets, businesses rushing to adjust the supply chains and hide against the new potential trade restrictions. Many industries – in particular manufacturing, automotive and agriculture – have already felt the impact of the increase in costs and disturbed commercial flows.
Bhatia stressed that prices do not only affect direct trade, but also the reshaping of geopolitical dynamics.
“We had very deaf geopolitics in investment for a long time, and clearly the prices change this,” he noted.
Trump’s aggressive trade policies have also led to concerns about economic insularity, with a certain warning that American risks have been isolated from the world markets. Bhatia stressed that commercial wars could encourage more localized economies, where countries focus on domestic production and reduce dependence on international trade.
“Patriotism thrusts are reflected in people who spend more locally in their own nation,” he said.
Given consumption expenditure represents approximately two -thirds of American GDP, an increase in internal expenditure resulting from commercial restrictions could support economic growth, but only if inflation increases and costs do not exceed the purchasing power of consumers.
“There is a high probability that an increase induced by the internal expenditure prices will bring the country’s GDP to do better than what you are planning,” added Bhatia.
No end in sight for the tariff war
Trump doubling the prices as a negotiation tool, many experts believe that the World Trade War should continue throughout 2025 and beyond. While more and more countries grow back with reprisal prices, the risk of economic fragmentation and slower global trade growth increases.
For the moment, analysts say that the most immediate risks include inflationary pressures, the disruption of the supply chain and the slowdown in economic activity, which could contribute to the growing possibility of an American recession by 2025.
