“Don’t use his term ‘liberation day’! Call it Trump’s devastating trade war! He has caused maximum uncertainty, likely to drive the U.S. economy to a near halt,” wrote one economist.

As U.S. President Donald Trump gears up to unveil yet another round of tariffs this week and observers warn of potential “stagflation,” the Wall Street giant Goldman Sachs on Sunday published a research note projecting that the chance of a recession in the next 12 months stands at 35%, up from 20%.

“The upgrade from our previous 20% estimate reflects our lower growth baseline, the sharp recent deterioration in household and business confidence, and statements from the White House officials indicating greater willingness to tolerate near-term economic weakness in pursuit of their policies,” according to the research note.

Trump has previously said he plans to unveil a slate of reciprocal tariffs on April 2—a day he has dubbed “Liberation Day”—and on Sunday he said they would impact “all” countries to start. The announcement rattled financial markets globally on Sunday, and stocks continued to fall on Monday. The S&P 500 dropped by over 1% at the start of trading, and the index is on track for its worst month since September 2022, according to The New York Times.

“Don’t use his term ‘liberation day’! Call it Trump’s devastating trade war! He has caused maximum uncertainty, likely to drive the U.S. economy to a near halt,” wrote the economist and author Anders Åslund wrote on Bluesky on Saturday.

In the research note, Goldman Sachs analysts said they expect Trump’s reciprocal tariffs to average 15% across all U.S. trading partners, though product and country exclusions may bring that average down.

Trump has already imposed blanket tariffs on China and blanket tariffs on traditional trade allies like Mexico and Canada, with some carve outs for certain goods. The administration has also enacted global aluminum and steel tariffs, and announced last week that it would impose 25% tariffs on autos and auto parts that are not produced in the U.S. The government will commence collecting the import tax on April 3.

Economists generally agree that tariffs—a tax on imports from other countries—are a cost that is largely passed on to consumers, though tariffs can be used to support domestic industries by promoting consumption of domestic-made goods.

In early March, U.S. Rep. Chris Deluzio (D-Penn.) penned an op-ed in the Times warning against “anti-tariff absolutism” on the grounds that they can be used as one part of a broader industrial policy to revitalize American manufacturing.

“Mr. Trump’s tariff approach has been chaotic and inconsistent. There’s no doubt about that. But the answer isn’t to condemn tariffs across the board,” Deluzio wrote.

Last week, United Auto Workers (UAW) president Shawn Fain, historically a Trump critic, praised the decision to impose auto tariffs.

“The UAW and the working class in general couldn’t care less about party politics; working people expect leaders to work together to deliver results,” said Fain in a statement. “We will work with any politician, regardless of party, who is willing to reverse decades of working-class people going backwards in the most profitable times in our nation’s history. These tariffs are a major step in the right direction for autoworkers and blue-collar communities across the country.”

Meanwhile, Goldman Sachs also predicts higher inflation and lower gross domestic product (GDP) growth. Higher tariffs are likely to increase consumer prices, according to the analysts, who raised their yearend 2025 inflation forecast by 0.5 percentage points to 3.5%, above the Federal Reserve’s target inflation rate of 2%.

Also as a result of tariff news and first quarter GDP data, Goldman Sachs has lowered its 2025 GDP growth forecast by 0.5 percentage points to 1%, when measured from the fourth quarter of 2024 to the fourth quarter of 2025. Also, the report’s analysts now projects unemployment reaching 4.5%, a 0.3 percentage point increase from the previous forecast.

The Irish journalist and economic commentator David McWilliams warned in an opinion piece published Monday by Common Dreams that the “combination of a rapidly weakening economy and fear of inflation points to an old enemy not seen since the 1970s: stagflation, where unemployment and inflation rise together.”

Other observers have also warned that stagflation could be looming.

“Launching chaotic trade wars with our allies and gutting Social Security, Medicaid, and other vital programs in order to fund tax breaks for his billionaire donors isn’t making life more affordable for working-class families,” said Alex Jacquez, the chief of policy and advocacy at the Groundwork Collaborative, in a statement earlier this month. “It is, however, a perfect recipe for stagflation.”

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