MK sports Koreaseen at the port of Oakland as trade tensions escalate over US tariffs, in Oakland, California, US, on March 6, 2025. Photo: IC" src="https://www.globaltimes.cn/Portals/0/attachment/2025/2025-03-25/15bbca1b-4ea5-4549-8daa-e04c0afff536.jpeg" />

A cargo ship full of shipping containers is seen at the port of Oakland as trade tensions escalate over US tariffs, in Oakland, California, US, on March 6, 2025. Photo: IC

As US reciprocal tariffs are scheduled to take effect on April 2, worries in the US have been worsening, with some negative impacts already emerging, according to media reports.

Goldman Sachs said in a report released on Sunday local time "We now see a 12-month recession probability of 35 percent. The upgrade from our previous 20 percent estimate reflects our lower growth baseline, the sharp recent deterioration in household and business confidence, and statements from White House officials indicating greater willingness to tolerate near-term economic weakness in pursuit of their policies." 

The report said that higher tariffs are likely to boost consumer prices, and it has lifted the year-end 2025 core Personal Consumption Expenditures (PCE) inflation forecast by 0.5 percentage points to 3.5 percent year-on-year.

Reflecting both the tariff news and a decline in the GDP tracking estimate of the first quarter to just 0.2 percent, it has also lowered the 2025 GDP growth forecast by 0.5 percentage points to 1.0 percent measured from the fourth quarter in 2024 to the fourth quarter in 2025, according to the report.  

The investment bank also raised the year-end 2025 unemployment rate forecast by 0.3 percentage points to 4.5 percent, per the report.  

The investment bank continues to believe the risk from the April 2 tariffs is greater than many market participants have previously assumed, per the report. 

If the reciprocal tariffs take effect, the loss in benefits of US consumers and producers would necessarily exceed the tariff revenue collected by the US government, Gao Lingyun, an expert at the Chinese Academy of Social Sciences, told the Global Times on Monday. 

Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, said that the product quality of imported goods for US consumers could be impacted as merchants may switch import origins due to rising costs resulting from the tariffs.

Speaking about the impacts on US businesses, Gao said that increasing tariffs, regardless of the rate, will inevitably raise prices downstream, whether for consumer goods or producer products.

In addition to inflation and weakness in consumption, the tariffs will severely disrupt global supply chains. The US market's established reliance on multinational sourcing networks would face chaos as importers scramble to find alternative suppliers‌, Zhou told the Global Times on Monday.

CNBC reported on Friday that the Federal Reserve's key inflation measure rose more than expected in February while consumer spending posted a smaller-than-projected increase, citing the US Commerce Department.

The core PCE price index showed a 0.4 percent increase for the month, the biggest monthly gain since January 2024, putting the 12-month inflation rate at 2.8 percent. Economists surveyed by Dow Jones had been looking for respective numbers of 0.3 percent and 2.7 percent, the report said.

The Bureau of Economic Analysis report showed that consumer spending accelerated 0.4 percent for the month, below the 0.5 percent forecast, per the CNBC report.

"There is no other conclusion possible other than the Trump 2.0 economic policies are frightening consumers as much as they do corporations," Chris Rupkey, chief economist at FwdBonds, wrote in a note on Friday. "The economy is going to stall out if not something worse if Washington policymakers are not careful," CNN reported.

Reuters reported that a survey from the University of Michigan on Friday showed consumers' 12-month inflation expectations soared to the highest level in nearly two-and-a-half years in March. Even more worrisome, consumers anticipated inflation would remain elevated in the years beyond.

"We are moving in the wrong direction and the concern is that tariffs threaten higher prices, which mean the inflation prints are going to remain hot. This will constrain the Fed's ability to deliver further interest rate cuts," James Knightley, chief international economist at ING, was quoted saying in the Reuters report. 

As for the impacts on other sectors such as investment and employment, Gao said that there will be short-term impacts while the long-term impacts remain uncertain. Zhou said that reciprocal tariffs would result in corresponding counterattacks from other countries, and this would have a significant adverse impact on exports of US products.