Recession Fears Rise as Markets React to Trump’s Tariffs – wna24

Financial markets are signaling growing fears of a potential U.S. recession as President Donald Trump’s tariff proposals dominate economic discussions. While Trump has long insisted that “trade wars are good, and easy to win,” traders and analysts reportedly believe otherwise, warning that aggressive tariffs could slow economic growth and weaken consumer confidence.

During his first term, Trump often adjusted policies in response to market reactions—a strategy known as the “Trump put.” However, investors now worry that a second Trump presidency might take a more rigid stance, ignoring financial market concerns.

Treasury Secretary Scott Bessent reinforced this shift in priorities, stating on Tuesday, “Wall Street’s done great, but we have a focus on small business and the consumers. So we are going to rebalance the economy.” This suggests that the administration is willing to accept market turbulence in pursuit of broader economic restructuring.

Bond markets are also reflecting fears of an economic slowdown. On February 11, investors saw only a 1% chance that the Federal Reserve would cut interest rates four times this year. That probability has now surged to 30%, with markets assigning a 62% chance of at least three cuts.

While rate cuts often provide relief, such expectations typically signal concerns about an economic downturn. With inflation remaining stubbornly high, the only reason for multiple cuts would be a significant slowdown—or even a recession.

Trump’s proposed tariffs could further complicate the situation. According to a report from Axios, analysts warn that while tariffs often lead to a stronger dollar, the latest market trends show the opposite. A weaker dollar suggests that investors see Trump’s tariff measures as harmful to the U.S. economy, potentially outweighing any trade benefits.

George Vessey, lead macro strategist at Convera, summarized the concerns: “A new reality of higher domestic prices and weaker growth [is emerging] owing to Trump’s tariff measures.”

Historically, the U.S. dollar has been viewed as a “safe haven” in times of economic uncertainty. But if Trump’s policies are seen as a source of instability, the dollar could lose some of its appeal. While stock markets often move independently of the broader economy—especially given the dominance of large tech companies—other key indicators, including bond yields and currency markets, are all flashing signs of concern.

As Trump considers new tariff policies, markets are growing increasingly uneasy. Investors are bracing for what could be a volatile economic period ahead.