With inflation still high and growth slowing, Trump’s proposed import taxes might push the U.S. into a recession by late 2025.

Here’s what’s happening — and why it matters more than you think:

Elon Musk recently raised concerns that Trump’s proposed tariffs on imports could trigger a U.S. recession in the second half of 2025 — and he may not be wrong. Tariffs, which are essentially taxes on goods we import from other countries, raise the cost of everything from raw materials to finished products. That means higher prices for businesses and consumers — exactly what a fragile economy doesn't need right now.

As of June 2025, the U.S. economy is already showing signs of stress. GDP growth has slowed from 2.5% in Q4 2024 to 1.8% in Q1 2025. Inflation is still stuck at 4.2%, well above the Fed’s 2% target, and unemployment has climbed from 4.1% to 4.5%. That’s a cooling economy — and added tariffs could make it worse by pushing prices even higher while choking off trade.

Economists are sounding the alarm. A recent survey from the National Association for Business Economics now puts the chances of a recession by the end of 2025 at 45%, up from 30% late last year. If the proposed tariffs — up to 20% on goods from China and the EU — go into effect, the U.S. Chamber of Commerce warns they could disrupt $3 trillion in annual trade. And remember: tariffs rarely come without retaliation. Global supply chains could take another hit.

History backs this up. Trump's earlier tariffs (2018–2019) reduced GDP by 0.2% and cost 142,000 American jobs. According to a new report by Goldman Sachs, this next round could shave 0.5% off GDP in 2025 — possibly the final blow that tips the economy into recession.

While consumer spending and a strong services sector are helping hold things together for now, the bigger picture is shaky. With interest rates already at 5.25% (the highest since 2007), borrowing is down, and investment is slowing. If tariffs go into effect without relief measures like tax cuts or fiscal support — which haven’t been outlined yet — the risk of a downturn becomes much more real.

In short: the economy is on edge. Musk’s warning isn’t just about trade — it’s about timing. And if policymakers aren’t careful, the second half of 2025 could look a lot like 2008… but this time with inflation still hanging around. #TrumpVsMusk