It's Around the Corner Just in Time for Holidays: Trump's Recession

The Trump Recession Is Coming
Alex Shephard
Wed, August 27, 2025 at 1:00 PM GMT+3·5 min read





Speaking at a North Carolina campaign rally almost exactly a year ago, Donald Trump painted a dire picture of the American economy should Vice President Kamala Harris win the presidency in November. “If Harris wins this election, the result will be a Kamala economic crash, a 1929-style depression,” Trump said. “When I win the election, we will immediately begin a brand new Trump economic boom.”

Trump was talking then about the election’s most important issue: post-pandemic inflation, for which voters blamed Harris’s boss, President Joe Biden. In May of last year, a clear majority—including 49 percent of Democrats—wrongly believed the country was already in a recession when Trump delivered that speech. Americans hated the economy and wanted a change. That is, more or less, the story of how Trump won the 2024 election (though it certainly helped that Trump spent the majority of the campaign running against an 81-year-old who wasn’t up to the challenge, to put it mildly).

You don’t hear much about a recession anymore. That’s not because Trump was right when he was speaking in North Carolina last August. True, he won and the country certainly hasn’t entered into a second Great Depression. While a Day One boom didn’t take place, the Dow Jones Industrial Average is a few thousand points higher than it was then. But the economy is in significantly worse shape than it was a year ago, thanks in large part to actions Trump himself has taken. The public recognizes this, as polls show a clear majority of Americans disapprove of his handling of the economy and blame him for rising prices. Still, media attention has lagged: There is nowhere near the coverage of consumer attitudes that there was last spring.

To be fair, there has been a lot to cover since Trump took office: the gutting of the federal government, the deportation of law-abiding immigrants to foreign gulags, the militarization of L.A. and now D.C., the weaponization of the Department of Justice, airstrikes on Iran, and so much more. But Trump has also done everything possible to push the country toward recession.

His “Liberation Day” tariffs have destroyed relationships with key trading partners, cost thousands of jobs across the country, and caused prices to soar (with much worse to come). Trump has repeatedly insisted that this abrupt return to the protectionism of the late nineteenth century would revitalize American manufacturing and deliver a windfall so enormous it would replace the income tax. The math does not add up, alas. In July, the federal government brought in $29 billion in tariff revenue—a sizable increase from the previous year. Over a full year, that would amount to about $350 billion, which pales in comparison to the nearly $3 trillion generated by the income tax. As for the manufacturing gains, well, just last week John Deere announced hundreds of layoffs, which the company attributed partly to Trump’s tariffs.

And surely most Americans don’t even care how much money the U.S. raises from tariffs unless it somehow improves their own finances, which of course it does not. The Tax Foundation, no one’s idea of a left-wing shop, says that Trump’s tariffs “amount to an average tax increase per US household of $1,304 in 2025 and $1,588 in 2026.” The tariffs also will hurt the economy overall, causing a nearly 1 percent decrease in the GDP over the next decade, the organization estimates.

Trump’s ongoing war with the Federal Reserve also makes a recession more likely. Since taking office, the president has been hounding Fed Chairman Jerome Powell to cut interest rates. He is now attempting to oust Fed governor Lisa Cook on what seem to be trumped up mortgage fraud charges so he can install another loyalist on the board who will back the rate cuts he desperately wants.

Trump’s war on the Fed is just as reckless and unconstitutional as his tariffs, but it does make a bit more economic sense. The president just signed a massive corporate tax cut into law and thinks—with reason—that lower interest rates will boost the economy and lift his presidency. What Trump doesn’t seem to understand or care about is that launching a war with the Federal Reserve could just as easily do the opposite. Crushing the body’s independence could cause the stock market to crash and the dollar, which has been steadily falling since inauguration, to collapse. Those lower interest rates could juice inflation that has been ticking upward.

In addition to his likely illegal tariffs and aggression toward the Fed, Trump has a growing interest in taking a government cut of large corporations like Intel, Nvidia, Nippon-U.S. Steel. The overall goal here is clear: Trump wants full control of the U.S. economy. That’s reckless no matter who the president is. But it’s a ruinous mission for a president who obviously has no idea what he’s doing. 

It’s hard to overstate just how dire the situation is. The economy that Trump inherited was the envy of the developed world. For all of its problems—such as lingering high prices and longstanding inequality—Biden and his advisors navigated post-pandemic inflation better than almost anyone, thanks to the administration’s industrial policy and several key pieces of legislation aimed at boosting infrastructure spending. In just a few months, Trump has wrecked that progress. And he has done so for no compelling reason whatsoever—simply because he has always, going back to his first term, taken pleasure in destroying his predecessor’s accomplishments.

Any Republican president would have signed the tax cut that Trump signed in July. But no other president from either party would have launched a trade war that has already pushed the U.S. economy to the brink, and it’s highly unlikely that anyone else would have launched such a destructive war against the Federal Reserve. Such are the consequences of an electorate that was angry about high prices, and then unwittingly voted for even higher prices. If there is a recession in the next three years—something that grows increasingly likely with each passing week—Trump will own all of it.