According to investors, the US economy is in danger of recession from a world trade war
The reality of euphemism “reciprocal” duties to imports from more than 180 countries announced last Wednesday by US President Donald Trump was worse than investors’ fears, as shown by the pounding of the stock markets.
Stock prices dipped around the world on Thursday that intensified on Friday, after China’s response by imposing duties on imports of US products and checks on exports of certain rare earths to the US. It is noteworthy that the fall was bigger on Wall Street, with the S&P 500 shares to slide about 11% on the two -day period and its capitalization decreased by 5.4 trillion. dollars while the Nasdaq index fell 12%. In Europe, the Stoxx 50 closed with a loss of about 8% on the two days.
In addition, the dollar suffered a pounding and the euro exchange rate was depleted about 2%, over $ 1.10 for some time, although its profits were reduced on Friday. The investors’ verdict for Trump’s duty crescendo, with the reinstatement of their contributors to levels in force before World War II, was clear: all economies would be affected by a visible time horizon, but the biggest victim will be the American economy itself.
This is perhaps one of the biggest paradoxes in the world – the government of the world’s largest economy is implementing a policy, ignoring all the warnings of the suffering it will cause in itself and in countries that have been its allies over time. Similar are estimates of large American banks and other firms, with JP Morgan Bank providing a 0.3% recession for the US economy this year from growth of 1.3% before Trump announcements and unemployment ejecting at 5.3%. For the eurozone there are also growth concerns and Barclays estimates that there is a risk of recession in the second half of 2025.
For the products of the European Union, a single coefficient of 20%was imposed, which also applies to Greek products. Greek exports to the US are low, only 4.8% of total exports in the country, mainly concerning agricultural products, fuel, steel and aluminum. The immediate impact on the Greek economy will therefore be small, but the most important ones will be indirect because the economy of basic export markets of Greek products, such as Germany, Italy and other European countries, will be negatively affected.
Trump’s sweeping duties were imposed on “righteous and unjust” and in an arbitrary way that sparked huge reactions to traditional allies and opponents of America. They start at 10% for countries, with which the US has surplus or balanced bilateral trade balance and escalate according to the height of the deficit they have with other countries, as a percentage of imports from them. China duties 34%, but virtually 54% if it was estimated at 20% announced last month, and even the poor, even higher rates were announced.
The formula for the calculation of duties has nothing to do with the recovery of allegedly injustice to the US and the imposition of “reciprocal” duties that would restore equitable conditions of competition. More gave the impression that it was used to impose a new world -class in trade, which, according to its inspirers, will provide a distinctive treatment for US products.
The duties could theoretically be revised and mitigated through bilateral negotiations. President Trump mentioned this perspective, saying that he could discuss if there was a “excellent offer” from other countries. Only, however, this wording shows that America wants large concessions that other economies would hardly accept.
The hard stance of the US has already triggered the harsh response from China, with a 34% duty on US imports from April 10, resulting in a escalation of trade war that will lead to even more adverse developments around the world and increase the chances of recession. On the EU, also the President of the Commission, Ursula von der Lien, stressed that there would be an EU’s strong reaction with countermeasures unless there is room for any compromise through negotiations.
