Trump’s ‘Beautiful’ Tariffs Could Push US Toward Recession, ING Warns
ING has downgraded its outlook for the US economy, warning that unless President Trump reverses course on his aggressive tariffs or the Federal Reserve makes big, fast interest rate cuts a recession is looking more likely.
Why Trump Loves Tariffs
Trump sees tariffs as a tool for three big things:
1. Pressuring other countries to change their behavior.
2. Bringing manufacturing jobs back to the US.
3. Raising money to fund tax cuts.
He’s introduced a 10% minimum tariff on imports, going up to 145% for most Chinese goods. While this could help over time, it’s creating immediate problems for the economy.
Trouble Ahead
Markets are reacting badly stock and bond prices have dropped, and volatility is up. Tariffs might help border security with Mexico and Canada, but they’ve also sparked retaliations and consumer boycotts. Canadian flight bookings to the US are already down.
Even bringing manufacturing back to the US isn’t easy labor, construction, and logistics costs are high. In many cases, it’s still cheaper to produce overseas, even with tariffs.
As for raising revenue, the administration expects to bring in $600-700 billion a year, which would go toward extending Trump’s 2017 tax cuts. But that just prevents taxes from rising in 2026 new tax breaks likely wouldn’t arrive before then.
Three Big Problems for US Households
1. Rising prices for goods (and some services like insurance).
2. A cooling job market, with layoffs and slower wage growth.
3. Stock and bond market losses, making wealthier Americans less likely to spend.
Investment is still holding up, but business confidence is shaky. ING expects GDP growth to drop to 1.4% in 2025 and 1.1% in 2026, down from earlier forecasts.
Fed to Step In
Inflation is expected to climb above 4%, mostly due to higher goods prices. But rent increases a big driver of inflation are already slowing. ING predicts inflation will ease back to 2% by late 2026.
The Fed has already cut rates by 1% this year and might hold steady for now. ING expects significant rate cuts starting this summer likely another 1.25%.
Trump Calls Them ‘Beautiful’ But Are His Tariffs Breaking America?
