Recession Obsession

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Politics U.S.

By James Oliphant, national political correspondent

Nearly two months into Donald Trump's second term, the word on everyone's lips is the last one presidents want to hear.

That word, of course, is "recession," and it has dominated the discourse around Trump's presidency over the last several days as he bullishly pushes forward with his tariff scheme in an ambitious bid to restructure the global economy.

His insistence on punishing allies such as Canada with harsh levies on industrial staples like steel and aluminum has spooked markets and rattled corporate America while raising the specter of higher prices on consumer goods – one of the main problems Trump was elected to remedy.

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Economic uncertainty

I'm James Oliphant, national political correspondent for Reuters, and I have avoided checking my 401(k) this week amid fears I will be manning a fast-food counter in my golden years.

Trump and his Republican administration have repeatedly bashed the economy that they inherited from Democrat Joe Biden. But when Trump took office in January, the economy had enjoyed more than two years of solid growth, consumer spending was strong, and unemployment was still near historic lows.

Now, analysts say that the uncertainty surrounding Trump's policies is contributing to the new economic angst.

This week provided a case in point. When the Canadian province of Ontario said it would impose a surcharge on electricity it provides to a few U.S. states, Trump said he would double the tariff on Canadian metals to 50 percent. It had been Trump's original tariff on those metals that had prompted Ontario's reaction.

But after Trump's threat, Ontario said it would suspend the charge, and Trump backed down.

It was part of another chaotic week at the White House. Trump on Sunday kickstarted a Wall Street sell-off when in an interview he refused to rule out a recession if that's what it takes to enact his economic agenda.

"The Trump administration seems a little more accepting of the idea that they're OK with the market falling, and they're potentially even OK with a recession in order to exact their broader goals," Ross Mayfield, investment strategist at Baird in Louisville, Kentucky, told Reuters.

By Monday, the White House was backpedaling. "There are a lot of reasons to be extremely bullish about the economy going forward. But for sure, this quarter, there are some blips in the data," said Kevin Hassett, a top economic adviser to Trump.

Wall Street ignored the administration's attempt to calm the furor. When the markets closed on Monday, the sell-off had wiped out $4 trillion from the S&P 500's peak last month when optimism over Trump's agenda abounded. Perhaps more than a "blip" in the data. Social media was littered with charts showing the market's tumble since Trump took office.

For the White House, even the good news contained some bad news. A better-than-expected inflation report was marred by fears that tariffs will drive prices up. And even if some Trump advisers believe that a short-term "detox" is necessary to reboot the economy in line with their vision, the outcome of that could be volatile and difficult to manage.

Meanwhile, Europe and other trading partners slapped retaliatory tariffs on U.S. goods as Trump's policies escalated. The European Commission said it would impose counter tariffs on up to 26 billion euros ($28 billion) worth of U.S. goods next month.

If all of that calls for a stiff drink (and a flow chart), it's understandable. But you had better stock up on Irish whiskey or single-malt Scotch before they become the next casualties of the trade tussle. War, they say, is hell.

Most Americans want Trump to prioritize inflation, a Reuters/Ipsos poll found. Few care about expanding US territory.

Of the following issues, which would you like President Donald Trump to prioritize?

The view from Sydney

Tesla is taking a beating in Australia and New Zealand in response to CEO Elon Musk's prominent role in Trump's administration. Tesla sales in the four months since Trump's election were down 35% compared with the same time last year, according to data from Australia's Electric Vehicle Council.

Photo of the week

U.S. President Donald Trump sits in the Oval Office of the White House in Washington, D.C., U.S., March 7, 2025. REUTERS/Leah Millis.

What to watch for

March 13: Deadline for agencies to submit downsizing plans to the Department of Government Efficiency
March 14: Deadline to keep the federal government funded
March 15: The annual Gridiron dinner featuring the Washington press corps and leading politicians

The who, what and when

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