Traders on the Kalshi prediction market are placing a 61% probability on the United States entering a recession in 2025, following President Donald Trump’s sweeping tariff order announced on April 2.
The figure is based on the standard definition of a recession—two consecutive quarters of negative GDP growth—as tracked by the U.S. Department of Commerce.
Recession odds on Kalshi have nearly doubled since March 20 and now align with similar predictions on rival prediction platform Polymarket, where traders currently put the likelihood at 60%.
Rising Pessimism Signals Market Fears Over Trump’s New Trade Policies
The spike in pessimism reflects mounting concern over the potential economic fallout from the new trade measures.
Trump’s executive order introduced a blanket 10% tariff on all imports and added “reciprocal” tariffs targeting trade partners that impose duties on U.S. goods.
The announcement triggered immediate turbulence in financial markets, leading to a massive sell-off that erased over $5 trillion in shareholder value within days.
Market analysts warn that the tariffs could spark a prolonged trade war, increasing economic uncertainty and weighing heavily on both traditional equities and risk assets like cryptocurrencies.
The downturn has revived fears of a bear market and broader macroeconomic slowdown.
Despite the growing concerns, President Trump has maintained that the tariffs will ultimately benefit the U.S. economy by correcting trade imbalances.
“The markets are going to boom,” he asserted on April 3, downplaying the sharp market correction as temporary.
Some observers, including asset manager Anthony Pompliano, have speculated that the sell-off may be strategic.
Pompliano suggested that Trump may be using market pressure as a tool to push the Federal Reserve to lower interest rates.
Supporting this theory, 10-year U.S. Treasury yields have dropped from 4.66% in January to 4.00% as of April 5.
In a post on Truth Social, Trump called on Fed Chair Jerome Powell to take action, writing, “This would be a perfect time for Fed Chairman Jerome Powell to cut interest rates.”
Last month, Bitcoin commentator Anthony Pompliano said that the Trump administration may be deliberately engineering market turmoil to pressure Federal Reserve Chair Jerome Powell into lowering interest rates.
He hypothesised that President Donald Trump and Treasury Secretary Scott Bessent are attempting to crash asset prices, forcing the Fed’s hand to reduce rates.
U.S. Stocks Lose $11 Trillion Since February
As reported, U.S. stock markets have experienced a staggering $11 trillion wipeout since February 19, with losses accelerating on April 4 following heightened concerns over President Donald Trump’s sweeping tariff measures.
The single-day market loss amounted to $3.25 trillion—exceeding the total valuation of the global cryptocurrency market, which stood at $2.68 trillion at the time.
Among major tech players, dubbed the “Magnificent 7,” Tesla led the plunge, falling 10.42%. Nvidia and Apple also saw steep losses, dropping 7.36% and 7.29% respectively.
The widespread sell-off sent the Nasdaq 100 tumbling 6% on the day, pushing the index officially into bear market territory.
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