US recession fears: ‘Trump is not making the US economy great again’
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Donald Trump dodged questions about a potential recession in the US just days before a major decline in the US stock market. Tariffs and fears of trade wars are believed to be responsible, so what’s his plan – and how will the rest of the world be affected?
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Read time: 4 mins
In brief…
- Despite a post election “bump” for the US markets after Trump’s 2024 win, the value of the US stock market has dropped by 9% in just one month, with companies such as Elon Musk’s Tesla facing enormous decline in value.
- The News Agents say that since coming to power, despite being elected to fix the US cost of living crisis, he has instead been focused on global politics – specifically the situations in Ukraine and Gaza.
- Trump believes, The News Agents say, that America can survive alone, but the UK, which is more dependent on UK trade, could follow the US into recession.
What’s the story?
Donald Trump warned Americans things might get "bumpy" for the US economy once his tariffs were introduced.
Major retailers warned of price increases in stores.
But now, US stocks have taken a dramatic fall in price on the stock market as the world reacts to the impact of the Trump tariffs and amid fears of global trade wars.
The US S&P 500 share index fell by almost 3% on Monday, affecting major organisations such as Meta, Amazon, Nvidia and Tesla – which saw its share price drop by 15.4%.
S&P has dropped by 9% in a month, with some experts suggesting it could lead to a recession in the US.
When asked about the possibility of a recession during an interview with Fox News, Trump said he hated to "predict things like that".
Speaking on the weekend, the president described the situation as a "period of transition" for America, and claimed to be "bringing wealth back to America".
"There was a post election bump for Trump – where a lot of people looked around at the election result and thought, we're going to get rich on this," says Emily Maitlis.
"So they piled into the stocks. They piled into stock markets."
Now, she adds, "something rather different is happening".
"The investors who thought they were onto a good thing are suddenly thinking: 'WTF. I don't get what he's doing. I don't get what he's doing with Doge. I don't get what he's doing firing 1000s of employees.'
"He's not doing things that are making the economy great again."
What's Trump's plan?
Lewis Goodall says that under the Biden administration, the US economy was "pretty decent", although admits that consumers didn't feel the benefits.
"Since the election, where Trump has focused most, is actually on geopolitics, on Ukraine, Gaza," he says.
"But we know that what got him to the White House was concern about prices, the American obsession.
"If anyone watches or listens to American media a lot, you will hear so much about the price of eggs in particular."
On this, Lewis says, Trump has had "very little to say" since his inauguration.
"Why are Tesla stocks in particular down? Well, it's because investors have realised that Tesla is highly reliant on supply chains in Mexico, in China, in Canada," he adds.
All these countries are subject to Trump's tariffs and, Lewis adds, will make the cost of Tesla's business more expensive.
"Probably, anyone you know who has a Tesla now, has the bumper sticker saying, 'I bought this before he became a bell end'," says Emily.
Jon Sopel believes that Trump will stick the course with his plans, and is "in it for the long term" when it comes to causing turbulence in the UK economy.
"He genuinely believes, apparently, that this is the way to long term growth," Jon says.
"I'm wondering whether we are going to see this as a sustained period of economic policy where he doesn't care."
But Lewis says everything playing out in the US economy now can be traced back to his early years, and his long-time views on international trading partners, saying there has always been a "consistent thread" to Trump's politics.
"If you go back into the 80s, when he starts giving interviews, he's always been convinced that America, in some form, is getting ripped off," he says.
"It was the Japanese in the 80s. Then it was the Chinese, then it was the Europeans.
"Tariffs are his way of redressing that balance."
Lewis adds that many of Trump's actions now, in his second term as president, come from a place of "grievance".
"He believes America is always big enough, and powerful enough, to do it alone," he says.
"He believes being interdependent with other countries, either economically or strategically is a mistake. America doesn't need it.
"America is big enough, ugly enough, powerful enough to get what it wants in foreign policy and economic policy, and everyone else to get us has to get into line."
But that, he adds, isn't quite how things work.
"The truth is that America is economically and strategically interconnected with everybody else, and that does exert a gravity, and it does exert a pull, and Trump cannot just escape those political and economic logic."
What happens if the US goes into recession?
It's this "strategic interconnection" the US has with the rest of the world that could cause major upset in other territories if it slides into recession – not least in the UK.
"Trump left the door open to the idea of recession, saying that that could happen, and if there is a recession in the US again, that will affect us in the UK, it will affect Europe," says Lewis.
"It's not so much 'America first' right now, it's 'America alone'."
This, he adds, is simply not the case for Britain, which relies much more on our trading relationship with America.
"It'll push us into recession and it will make the fiscal situation here even harder.
"It'll make it even harder for us to support Ukraine with rearmament or that.
"It is all interconnected. So much of the world right now begins and ends in Washington."
Listen to the latest episode of The News Agents.
