Apollo Global Management's chief economist, Torsten Sløk, has issued a stark warning regarding the impact of President Trump's tariffs on the U.S. economy. Sløk suggests that the tariffs have significantly increased the risk of a recession, estimating the probability at 90%. He cautions that if the tariffs remain unchanged, the U.S. economy is almost certain to enter a recession by 2025.
Sløk highlights that the tariffs, implemented earlier this month, could lead to two consecutive quarters of economic contraction, potentially reducing GDP by 4%. The primary concern is the adverse effect on small businesses, a crucial component of the U.S. economy. These businesses, which have long relied on a stable economic system, may struggle to adjust due to insufficient working capital to cover the additional tariff costs.
The potential consequences include halted shipments, canceled orders, and bankruptcies among established retailers. Small businesses are vital, providing around 110 million jobs and significantly contributing to GDP. Their investment levels surpass those of larger corporations, making their slowdown a considerable threat to the broader economy.
