The Trump administration’s escalating trade war has sent shockwaves through the global economy, with Wall Street giants sounding the alarm over an imminent recession. As markets reel and experts warn of a potential depression, a haunting question lingers: Is this economic chaos by design—or simply the result of catastrophic miscalculation?
That the Trump administration’s trade war will trigger a steep economic downturn in the U.S. is almost a foregone conclusion a week after the president announced sweeping new tariffs on imports. Last week, JP Morgan, the nation’s largest bank, estimated that there is a 60 percent chance of an imminent recession.
That was followed by an announcement from Goldman Sachs, America’s second-largest investment bank, that its economists had raised the odds of a recession to 45 percent, representing the second time in a week that it has increased its forecast. In total, seven bank forecasting arms, including Bank of America and Deutsche Bank, have warned of significantly higher chances of a recession since Trump’s April 2nd announcement sent global markets into a tailspin, erasing trillions of dollars from Wall Street balance sheets, retirement accounts and public pensions. The S&P 500 is in danger of entering a bear market, defined as a devaluation of 20 percent over a short period of trading, leading one of Trump’s biggest Wall Street supporters, the hedge fund manager William A. Ackman to post Monday morning on the social media platform, X:
“The formula used by the administration to calculate tariffs made other nations’ tariffs appear four times larger than they actually are.
President @realDonaldTrump is not an economist and therefore relies on his advisors to do these calculations so he can determine policy. The global economy is being taken down because of bad math”. . .“The President’s advisors need to acknowledge their error before April 9th and make a course correction before the President makes a big mistake.”
So recklessly ham-handed is Trump’s overhaul of U.S. trade policy that it has raised two vexing questions:
- Will the reforms trigger a second Great Depression?
- Is Trump deliberately trying to crash the economy?
Both scenarios seem plausible.
Despite glowing reviews from the legacy news media, the Democratic party and orthodox economists, the U.S. economy was a train wreck even before Trump announced his protectionist measures and has been since at least the advent of the Great Recession nearly 17 years ago. Trump is, in fact correct, in assigning blame for the country’s economic woes to the decline of the U.S. manufacturing sector that began with Richard Nixon’s overtures to China in 1972 and culminated with the implementation of the North American Free Trade Act 22 years later.
What began as the plutocrats’ response to the 1970s stagnation crisis that cut deeply into corporate profits metastasized into a restructuring of global trade over the last half-century, led by U.S. efforts to ship its industrial base offshore to countries with lower wages, ultimately killing the goose, American manufacturing , that laid the golden egg. Employees’ wages that accounted for almost 52 percent of the national gross domestic product in 1969 had plummeted to 42 percent by 2024, depleting the U.S. economy of the consumer buying power that it needs to grow.
Without it, investors have had to rely increasingly on speculative financial schemes to make a buck, saddling consumers with more and more debt. President Barack Obama had an opportunity to stanch the hemorrhaging and replenish consumer buying power but he squandered it by bailing out the banks and financial institutions that were responsible for the subprime housing fraud rather than the swindled homeowners who were, it is worth noting, disproportionately African American and Latino. (A Department of Housing and Urban Development study found that lenders were twice as likely to issue subprime mortgages to borrowers in high-income Black neighborhoods than in low-income white neighborhoods.)
The emergence of the speculative FIRE industries–finance, insurance and real estate–combined with the offshoring of manufacturing jobs that pay a living wage, and the privatization of utilities such as water and electricity, have combined to create a domestic job market in which there are more fry cooks than millwrights, more DoorDash drivers than dockworkers, and not enough check left at the end of each month.
“These jobs are trash,” a 34-year-old African American single mother who gave her name as Monica Vincent told Black Agenda Report last month before Trump’s tariff announcement. She works full-time as a medical technician at an assisted living facility in Gastonia, North Carolina, and a part-time gig at a local Little Caesars pizzeria. “I go to work every day of the week and me and my kids would be homeless if it wasn’t for my sister taking us in. I’m just barely getting by.”
Monica’s complaint is characteristic of the African American working class and increasingly of white workers as well, and therefore representative of the Great Depression’s central narrative. Taking its cues from an animated proletariat that sought to turn bad jobs into good ones, the Roosevelt administration’s New Deal policies grew workers’ wages over time, resulting in the most prosperous middle class in world history before President Reagan began to dismantle the liberal consensus that had, by that time, governed the nation for more than 40 years.
Combined with his administration’s job cuts to the federal workforce, Trump’s tariff policies will almost certainly accelerate the loss of consumer buying power rather than replenish it, by forcing households to spend more for cars, food, electronics, clothing, appliances, and toys among other items. Moreover, the reciprocal tariffs imposed by countries such as China and Brazil will raise the prices of goods manufactured in the U.S. that are sold abroad, inevitably slicing into exporters’ access to foreign markets, and throwing American employees out of work.
Khadijah Crockett, 74, and a retired journalist who lives in the greater Washington D.C. area, said that she and several of her friends are weighing whether to withdraw their cash from the banks to avoid a severe downturn. She told Black Agenda Report:
“We need to be preparing for a Depression not a recession.”
This brings us back to whether Trump is deliberately trying to crash the U.S. economy. Writing on Truth Social Friday, he implored investors to buy stocks at a discounted price:
“THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!!!”
The former U.S. Labor Secretary in the Clinton administration, Robert Reich, believes that Trump is indeed trying to tank the economy, thus sparking a fire sale on assets, creating bargains for investors. Wrote Reich on his Substack Monday:
“But a recession is not necessarily bad for Trump and his billionaire buddies. America’s oligarchy depends on periodic recessions.
Recessions are opportunities to buy up real estate, companies, and shares of stock at bargain-basement prices. Recessions also give political cover to Trump, Musk, and Republican efforts to reduce labor and environmental standards.
Also, remember the business cycle. A recession early in Trump’s term is politically better for Trump and his Republican allies than a recession later in the term.
I believe Trump’s plan is for a recession in 2025 so that he and his billionaire buddies can ride the wave of a recovery in 2026 — just in time for the midterm elections.
Reich’s analysis has a ring of truth though that makes Trump’s trade war no less moronic. Under normal circumstances, a recession is not a phenomenon that can be easily controlled or manipulated; in tandem with the shaky fundamentals of a post-industrial state, a recession is like a brush fire in a dry, windy season. Things can get out of control quickly.
The U.S. economy is likely entering uncharted waters. No country in history has gone from the most industrialized in history to a post-industrial state. Africans who live in countries that made the transition from socialist economies to free-market enterprises in the globalization era are prone to say that in the days when trade was walled off from foreign exports, the shelves were empty but everyone had some money in their pockets. Now, under the auspices of a neoliberal or classical capitalist economy, the shelves are full but no one has any money.
Under Trump, the U.S. may be the first nation ever where the shelves are empty, and no one has any money.
Jon Jeter is a former foreign correspondent for the Washington Post. He is the author of Flat Broke in the Free Market: How Globalization Fleeced Working People and the co-author of A Day Late and a Dollar Short: Dark Days and Bright Nights in Obama's Postracial America. His work can be found on Patreon as well as Black Republic Media.
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