The odds on Polymarket for a U.S. recession in 2025 jumped dramatically from 22% to 52% on April 3, marking the most significant single-day rise in recession likelihood on the prediction market this year.
This shift followed the introduction of a comprehensive new trade policy that implements a universal 10% tariff on all imports, along with targeted “reciprocal” tariffs reaching up to 48% on products from 60 nations.
The new policy removes exemptions for sectors typically shielded from such tariffs, including raw materials, medical supplies, and essential industrial components.
Consequently, economists are voicing concerns about a compounding economic fallout across various fronts: increasing input costs, vulnerable supply chains, and waning consumer demand.
In the short term, these tariffs create inflationary pressure as costs are passed on to consumers for items like electronics, automotive parts, and construction materials.
With core inflation already high and interest rates elevated, these additional price shocks could diminish real disposable income and weaken demand, particularly affecting lower-income groups.
The new policy also amplifies existing supply chain risks, as many targeted imports currently lack domestic alternatives. Rapid development of domestic alternatives or nearshore production remains structurally unattainable in 2025, leading to heightened investor doubts regarding the feasibility and economic justification of the policy.
Despite the administration’s claims surrounding reindustrialization and strategic advantages, analysts have noted that the tariff numbers used to support this reciprocal approach are seemingly inconsistent with data from global economic organizations.
This inconsistency has raised concerns about the validity of the assumptions behind the policy, contributing to fluctuations in prediction markets.
Liam ‘Akiba’ Wright
Also known as “Akiba,” Liam Wright is a reporter, podcast producer, and Editor-in-Chief. He believes in the potential of decentralized technology to bring about significant and positive changes.