A television station broadcasts the US Federal Reserve's quarter-point interest-rate cut on the floor of the New York Stock Exchange (NYSE) on December 18, 2024. US stocks declined further after the Federal Reserve lowered rates by a quarter point. Photo: VCG

As the US rolls out its new tariff policies, warnings of a potential downturn in the world's largest economy have grown louder. A recent Deutsche Bank survey indicated a nearly 50-percent chance of the US economy slipping into recession this year, according to media reports on Monday.

The survey, taken on March 17-20, showed respondents believed the possibility of a downturn in US economic growth over the next 12 months is about 43 percent, CNBC reported.

Though unemployment remains low and most data points suggest continuing if not slowing growth, the survey results reinforce the message from sentiment surveys that consumers and business leaders are increasingly concerned that a slowdown or recession is a growing risk, the report said.

Before Deutsche Bank released its report, former US Treasury secretary Lawrence Summers stated that a series of policy measures implemented by the Trump administration are eroding confidence, putting the likelihood of a US recession this year at nearly 50 percent, according to Bloomberg.

J.P. Morgan's chief global economist Bruce Kasman also projected that the likelihood of a US recession stands at 40 percent, up 10 percentage points from earlier this year. Kasman said the recession risk would rise, probably to 50 percent or above, if reciprocal tariffs that President Trump has threatened to impose from April were to meaningfully come in to force, Reuters reported.

Since returning to the White House for a second term, Trump has frequently launched tariff threats against major trading partners, prompting retaliatory measures from affected countries - potentially accelerating the pace of a US economic downturn, Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times on Tuesday. 

At the same time, the increase in tariffs has raised inflation expectations, prompting the US Federal Reserve to delay its plans for rate cuts in order to prevent rising prices from pushing inflation even higher, Yang said, adding that current economic figures point to a significant risk of the US economy slipping into recession in the first quarter. 

"Should the US economy slow down, many underlying issues could come to the surface," Yang noted.

The US Fed recently raised its core inflation projections for 2025 to 2.8 percent from 2.5 percent, and lowered its GDP growth forecast to 1.7 percent from 2.1 percent.

Trump has also declined to dismiss the possibility that the US economy could enter a recession this year and that inflation could rise, according to media reports on March 9.

Data released by the US Bureau of Labor Statistics on March 12 showed that the consumer price index (CPI) for February rose 2.8 percent year-on-year, while core inflation was 3.1 percent. 

Though inflation has eased slightly, "early signs are already emerging in the data showing how significant the impact of Trump's tariffs is on inflation," Wen Bin, chief economist at China Minsheng Bank, told the Global Times on Tuesday.

With the 10 percent tariff on China taking effect in February, the US February CPI mainly reflected the impact on Chinese-made goods. The breakdown of the US CPI showed that many products related to Chinese manufacturing already saw month-on-month price increases, such as a 0.5-percent rise in household appliances, a 1.2-percent increase in outdoor goods and a 1.5-percent uptick in stationery, Wen said.

"The impact of tariffs on US inflation is expected to be stronger than that in 2018. Producers have less ability to absorb costs, leading to higher prices downstream and reduced demand. Currency exchange rate adjustments are also more limited, and routes for bypassing tariffs are being blocked," Wen said, noting that as a result, tariff hikes will be absorbed through higher consumer costs and lower demand in the US, driving inflation and an economic slowdown.