RECENTION FIGHT Grip Wall Street: Could Trump's tariff war devote us to economic turbulence?

The fears of an economic slowdown in the United States have reinforced and put the stock markets into a downward spiral, while investors deal with the possible effects of President Donald Trump's escalating trade war. The Nasdaq Composite has entered the corrections according to the area of ​​correction after they have fallen more than 10% of the recent heights, while the wider S&P -500 ranges near this level. The Dow Jones Industrial average also has a downward trend and reflects the growing uncertainty about the US economy. In the meantime, the GDPnow model of the Federal Reserve Bank of Atlanta has its growth forecast in the first quarter of an expansion of 2.4% to a contraction of 2.8%-a shift that triggered speculation about an upcoming recession.

While most analysts still consider the likelihood of a recession as moderate, the combination of tariff calves, unsafe financial policy and a Hawkian attitude of the Federal Reserve has heated up fear in the financial markets.

Trump's Gambit tariff rattles investors

President Trump's aggressive trade policy has proven to be an important driver for market volatility. On Tuesday, the administration doubled the tariffs for steel and aluminum imports from Canada and increased the tasks from 25% to 50%.

Wall Street strategists are now adapting their forecasts to the increasing economic headwind in response to the increasing economic headings. JP Morgan's chief economist increased the probability of a US recession to 40%, compared to 25% a month ago.

In the meantime, Goldman Sachs has reduced its growth forecast from 2025 US growth from 2.4% to 1.7%. This warns that tariff hikes from GDP could reduce up to 1% if trading partners retaliated. The uncertainty caused by this tariff to forces companies to withdraw the attitude and capital investments, said David Kostin, chief strategy of the US stock strategy. “There is a time of transition because what we do is very large,” said Trump. While some of his business advisors tried to calm the markets, the mood of the investors has committed themselves.

Dalio warns of market turbulence because the debts concerns

Ray Dalio, founder of Hedge Fund Millionaire and Bridgewater Associates, has warned that structural weaknesses in the US economy, in particular increasing public debt, could have significant consequences.

“We have a very serious problem with the presentation of care when it comes to debt,” said Dalio in an interview on Wednesday in an interview. “The United States has to sell a lot of debts that the world does not want to buy.”

The US debt pollution has increased over 36.2 trillion dollars -122% of GDP -while the annual interest payments in the next financial year are expected to exceed 1 Billion US dollar. Dalio warned that this leads to “shocking developments” in the implementation of their obligations and possibly rescheduling, geopolitical pressure on creditors or austerity measures.

Its warning comes when the bond markets signal loads. The yield curve has flattened a lot – often a harbinger of economic downturn. The spread between the age of two and 10 years has expanded to the highest level since September 2024 and underlines the concerns of investors about economic instability.

Tech shares attribute the market when the growth prospects deteriorated

The technology shares have scored the biggest goals of the past few weeks, with the Nasdaq Composite so far gliding almost 9% in 2025. The analysts of Wall Street have reduced their sales growth forecast for large technology companies, with the weaker demand from consumers, cautious corporate expenses and global trade uncertainty.

Indian IT shares that depend heavily on US corporate customers have also suffered. The nice IT index broke into the territory and has replaced billions of market capitalization. Tata Consultancy Services (TCS), India's largest IT service provider, has decreased by almost 23%, while Ltimindtree has lost over 33% of its market value.

Morgan Stanley has downgraded several Indian IT shares and warned that a potential US recession could significantly dampen the demand for outsourced technology services.

Federal reserve in a bond as inflation, re -worried recession

The Federal Reserve remains caught between contradictory economic pressure. On the one hand, the inflation of consumers showed signs of loosening in February, with the consumer price index (CPI) increasing by 2.8% annually, somewhat below expectations. However, the effects of tariffs on imported goods threaten future price increases and may force the Fed to maintain higher interest rates for longer.

The FED left the interest in the last two sessions unchanged after they shortened them by 50 basis points in 2024, but the political decision -makers have signaled a cautious approach for the future. The risks grow, but it is not yet clear that a recession is imminent, said Boston, President Susan Collins on Wednesday.

A long time with high credit costs could continue to burden an already fragile economic outlook, especially since the debts of the companies continue to increase.

More pain ahead?

If the downturn materializes, the Ripple effects could be global. Emerging countries can be exposed to capital drains because investors are certainly striving for Haven-assets, while large trading partners such as Europe, China and India could experience demand shocks due to declining US imports.

At the moment, all eyes are on Washington and the Federal Reserve, while investors measure the next steps that could determine whether the US economy only slows down – or slips into the recession.

Read also | Dr. Doom sounds the alarm! Marc Faber warns Indian investors to end before it is too late

((Disclaimer: Recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of the economic times)