Nobel Prize-winning economist Paul Krugman warned that President Donald Trump’s unpredictable tariff policies are making a U.S. recession seem likely. Speaking on a Goldman Sachs podcast, Krugman emphasized that it’s not the existence of tariffs themselves but the extreme uncertainty around them imposing, pausing, and changing them rapidly that is depressing business investment and consumer confidence. Markets have already seen significant shifting, with Wall Street experiencing its worst days since 2020 before briefly rebounding after Trump paused some tariffs.
Krugman’s concerns are echoed by other financial leaders like Ray Dalio of Bridgewater Associates and economist Torsten Slok, who both warned that continued tariff volatility could easily push the country into a recession or worse. Dalio even compared the current environment to the 1930s, noting the dangers of mishandled trade wars and growing global tensions, particularly with China. Despite these warnings, Trump and his allies have defended the tariffs as part of a broader strategy to strengthen American manufacturing and encourage economic self reliance.
For now, Trump has issued a 90-day pause on a range of retaliatory tariffs, and negotiations with multiple countries are ongoing. However, tariffs on China remain, and the overall business climate remains shaky. Krugman noted that while he doesn’t expect a severe recession immediately, a sharp drop in consumer spending could quickly turn the situation worse, underlining the fragile state of the economy as the uncertainty continues.
.
https://www.newsweek.com/us-recession-seems-likely-nobel-winning-economist-says-2064347