Traders on the Kalshi prediction market now believe there’s a 61% chance the U.S. will enter a recession in 2025, largely due to President Donald Trump’s recent tariff order on April 2. This figure is based on the standard recession definition of two consecutive quarters of negative GDP growth. The odds on Kalshi have doubled since March 20, aligning with Polymarket’s 60% probability.
The rising pessimism stems from concerns about the economic impact of Trump’s trade policies, which include a 10% tariff on all imports and reciprocal tariffs against countries that tax U.S. goods. The announcement led to a rapid $5 trillion loss in market value due to a massive sell-off. Analysts warn these tariffs could trigger a prolonged trade war, heightening economic uncertainty and affecting both equities and cryptocurrencies. This downturn has rekindled fears of a bear market and a broader economic slowdown.
Despite these concerns, Trump insists the tariffs will ultimately benefit the U.S. economy. He downplayed the market’s sharp correction as temporary, predicting a market boom. Some observers, like asset manager Anthony Pompliano, suggest the administration might be strategically using market pressure to influence the Federal Reserve to lower interest rates. Supporting this theory, 10-year U.S. Treasury yields have fallen from 4.66% in January to 4.00% by April 5. Trump has publicly urged Fed Chair Jerome Powell to cut rates, arguing it’s an opportune moment.
U.S. stock markets have seen an $11 trillion decline since February 19, with losses accelerating on April 4 over concerns about Trump’s tariffs. On that single day, the market lost $3.25 trillion, surpassing the global cryptocurrency market’s total valuation. Major tech stocks, like Tesla, Nvidia, and Apple, experienced significant declines, leading to a 6% drop in the Nasdaq 100, officially entering bear market territory.
