Analysts are keeping a close eye on April 2 for any new tariff announcements from the United States, as President Trump has already imposed and threatened additional tariffs on key trading partners such as the European Union, Canada, Mexico and China.
Market concerns about a potential recession are growing, with Deutsche Bank reporting a 43% average expectation of a downturn, while views within Trump’s cabinet remain divided on the economic impact of his trade policies.
Analysts have a metaphorical date circled in the calendar for a little more than a week from now: April 2, the day more tariff pledges are expected to be confirmed, and possibly the day a universal tariff is proposed.
Hikes have already been threatened, rescinded, and eventually imposed on key trading partners such as Canada and Mexico, with additional increases on imports from China.
Since President Trump took office in late January, tariffs have been imposed on EU goods such as steel, with additional policies expected to be announced.
Deutsche Bank has previously chastised markets for failing to believe the White House, but new research shows that analysts are becoming more aware of the threat.
In its March global markets survey, which polled 400 market makers worldwide, Deutsche Bank discovered that sentiment about the extremes of Trump’s tariff regime is trending upward.
For example, on a scale of zero to ten (zero indicating no additional tariffs and ten indicating an extreme regime), the December 2024 average was five.
By March, the average had risen to around six, with more analysts answering at the higher end of the scale.
According to research strategist Jim Reid’s note, “However, markets are expecting Europe to face a sustained U.S. tariff rate of 18%, which feels higher than what is priced in.”
When asked for their sustained rate, rather than the peak at which tariffs are expected to begin during negotiations, the majority of respondents (26%) said 10% to 15%. However, an additional 24% and 22% of respondents chose 15% to 20% and 20% to 25%, respectively.
It comes after Trump took a tougher stance on the EU while running for a second term. On the campaign trail, the Republican politician stated that he would not make any exceptions for one of America’s closest trading partners, saying, “I will tell you what, the European Union sounds so nice, so lovely, right?” All the nice little European countries that come together.”
According to Reuters, he added, “They do not take our cars.” They do not take our farm products. They sell millions of cars in the United States. No, no, no. They will have to pay a high price.”
This threat has been reinforced since, with Trump telling his cabinet in February that, while he “loves the countries of Europe,” the EU was formed to “screw” the United States, saying: “That is the purpose of it. And they did a good job at it.”
As Reid points out, this higher-for-longer outlook in the face of tense geopolitics extends beyond the market’s current pricing strategy. JPMorgan Chase CEO Jamie Dimon recently stated that tariffs can do “good stuff” while only slightly increasing inflation by “0.1% or 0.2%.”
However, the man who received $39 million for his work in 2024 stated that a universal 25% tariff on all imports would be “quite recessionary and inflationary.”
Recession fears tip over 40%
Before the election, voters generally expected President Trump’s policies to be more beneficial to the economy than those of then-Vice President Kamala Harris.
However, in recent months, fears of a recession have increased, with Reid reporting that the average expectation for an American recession now stands at around 43%.
That being said, there was a wide range of opinions on the subject. Of the 400 respondents, 20% predicted a recession within the next 12 months, ranging from 20% to 30%.
Meanwhile, 17% and 15% of respondents said the chances are between 30% and 40%, and 40% to 50%, respectively.
A further 23% of respondents put the likelihood at more than 60%, demonstrating the wide range of outcomes that the market is currently expecting.
Similarly, even within Trump’s own cabinet, opinions appear to be divided.
Commerce Secretary Howard Lutnick, for example, told NBC earlier this month that Donald Trump is bringing growth to America. I would never bet on a recession. “No chance.”
Meanwhile, Trump’s Treasury Secretary, Scott Bessent, stated just a few days later that “there are no guarantees” that America will not experience a recession.
Bessent told Fox Business, “I can not guarantee anything.” But I guarantee you that there is no reason for a recession.”