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Billionaire Warns Trump’s Trade Tariffs Could Trigger Economic Downturn
A prominent billionaire supporter of Donald Trump has cautioned the US president against his recently implemented trade tariffs, warning they risk triggering a severe economic downturn, potentially a “self-induced, economic nuclear winter.” Amidst increasing market volatility, hedge fund magnate Bill Ackman urged the president to institute a three-month cessation to allow nations to renegotiate trade agreements with the United States. This plea was echoed by other influential figures on Wall Street, including JPMorgan Chase Chairman Jamie Dimon, who suggested Trump’s tariffs could inflate prices for American consumers.
Market Reaction and White House Stance
Despite the widespread economic unease, the American president appears resolute, with the White House quickly dismissing as “fake news” any speculation of a potential pause on the new tariffs. Rumors of a 90-day tariff moratorium had briefly buoyed a rapidly declining stock market on Monday, following a report on financial news network CNBC. However, the White House’s swift denial underscored Trump’s unwavering commitment to the import taxes. Stock prices subsequently stabilized.
Details of the Tariffs
The “baseline” tariffs of 10% on goods from most countries, announced last week, are already in effect. The higher “reciprocal” tariffs, intended for nations deemed “worst offenders,” are anticipated to be implemented later this week. Several countries are reportedly attempting to negotiate reduced rates with the White House.
Economic Concerns Mount
These new tariffs, compounding existing levies on goods from Canada and Mexico, as well as automobile imports, are generating significant apprehension among business leaders and economists. They fear these measures will escalate costs for American households and precipitate a global trade conflict.
BlackRock CEO Foresees Recession Risk
The head of BlackRock, the world’s largest asset management corporation, stated on Monday that the tariffs are expected to drive up prices and potentially inflation, thereby contributing to an economic recession, according to media reports. “Most CEOs I speak with believe we are likely in a recession currently,” declared Larry Fink, BlackRock’s CEO, at a meeting of the Economic Club of New York.
Goldman Sachs Increases Recession Probability
Goldman Sachs indicated on Sunday a heightened probability of a US recession within the next year, raising its estimate to 45% from 35% just a week prior – before Trump revealed his tariff plans at an event dubbed “Liberation Day.”
Trump Defends Trade Policy
President Trump maintains that the import taxes will revitalize the American economy through job creation and increased investment. Defending the tariffs on Sunday to reporters aboard Air Force One, he asserted, “Sometimes you have to take medicine to fix something.”
Ackman’s Shift and Warning
In a post on social media platform X on Sunday, Mr. Ackman acknowledged Trump’s argument that the global trade system had “disadvantaged” the US. However, he contended that the imposed tariffs were “excessive and imbalanced,” failing to differentiate between allies and adversaries.
- Ackman, founder of Pershing Square Capital Management, became a prominent Trump supporter in July 2024.
- His endorsement was significant given his prior support for the Democratic Party, viewed as a crucial endorsement from the business sector.
Global Repercussions and Retaliation
The Trump administration’s “reciprocal” tariffs, potentially reaching 50%, are set to impact key manufacturing hubs in Asia. Numerous nations have pledged to retaliate. China has already responded with counter-tariffs on American imports. Trump further threatened on Monday to impose an additional 50% tariff on Chinese goods, potentially pushing total taxes beyond 100%.
Ackman’s Call for Negotiation
Mr. Ackman asserted that Trump had initiated an “economic war against the whole world at once” that risked destabilizing investor confidence in the US. He proposed that the president seize “an opportunity to call a 90-day timeout, negotiate and resolve unfair asymmetric tariff deals, and induce trillions of dollars of new investment in our country.” His recent social media posts suggest he believes the onus is now on Trump, following an earlier message urging global leaders to negotiate directly with the US president to reach an agreement.
Dimon Highlights Economic Uncertainty
As global stock markets continued their decline on Monday, JPMorgan Chase’s chief executive officer, Jamie Dimon, echoed concerns, cautioning about “many uncertainties” surrounding the new tariff policy. In a letter to shareholders, Mr. Dimon stated tariffs would “likely increase inflation and are causing many to consider a greater probability of a recession.” He emphasized the urgency of resolution, writing, “The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse.”
Administration Downplays Recession Risks
In contrast to these warnings, Trump administration officials have minimized the recession risk. The initial 10% baseline tariff is already in effect, while the higher rates for specific countries are scheduled to take effect on Wednesday. Speaking on Air Force One on Sunday, President Trump claimed European and Asian countries were “eager to make a deal.”