The White House is considering a plan to impose a 20% tariff on most imports, the Washington Post reported on Tuesday.
According to the report, the proposal is one of several options being debated by President Donald Trump’s advisers.
While no final decision has been made, the sweeping tariff would mark a major shift in US trade policy, making it more protectionist than in recent decades.
Officials within the administration are also exploring a “reciprocal” approach, which would levy tariffs based on how other countries treat US exports.
Trump’s administration is also weighing using the trillions of dollars it expects in new import revenue for a tax dividend or refund, the report said, citing three unnamed people familiar with the matter.
While the full details remain uncertain, the expected announcement on April 2 has already sent ripples through financial markets, with investors concerned about the economic consequences of escalating trade tensions.
Trump’s broader trade strategy aims to make US trade “fairer,” according to administration officials, while also generating revenue for the federal government.
However, critics warn that the costs could outweigh the benefits, leading to higher prices for consumers, disruptions in supply chains, and potential retaliatory actions from major trading partners.
Markets and businesses rattled by trade war fears
Concerns over an impending trade war have already shaken investor confidence.
In the first quarter of 2025, the S&P 500 declined by 4.6%, while the tech-heavy Nasdaq Composite suffered a more dramatic drop of 10.4%.
Analysts attribute these losses in part to uncertainty surrounding US trade policy and its potential impact on corporate earnings.
Beyond financial markets, businesses across multiple industries are bracing for potential disruptions.
Many rely on imported materials and components, and higher tariffs could force them to raise prices or absorb the increased costs.
Consumer sentiment has also taken a hit, with surveys indicating rising anxiety over inflation and job security in key manufacturing sectors.
Global cost of 2025 tariff war could reach $1.4tn, report finds
A new analysis from Aston Business School paints a stark picture of the potential consequences of Trump’s tariff strategy.
The report examines multiple scenarios, ranging from initial US tariff impositions to full-scale global retaliation.
The worst-case scenario—where countries respond with reciprocal tariffs—could lead to a $1.4 trillion global welfare loss, the study found.
The report also highlights the long-term risks of tariff escalation, including reduced global competitiveness, fragmented supply chains, and a general slowdown in trade.
Economists point to the 2018 US-China trade war as a cautionary tale, noting that it led to significant disruptions without achieving the desired economic rebalancing.
Goldman Sachs raises recession odds to 35% amid trade war concerns
The escalating trade tensions led Goldman Sachs to raise its probability of a US recession in the next 12 months to 35%, up from its previous estimate of 20%.
In addition to the increased recession risk, Goldman slashed its 2025 GDP growth forecast to just 1% and raised its year-end unemployment rate projection by 0.3 percentage points to 4.5%.
Inflation expectations were also revised upward, reflecting growing economic uncertainty.
While the bank still expects the US economy to avoid a full-blown downturn, other analysts view the likelihood of a recession as closer to a coin flip.
This marks Goldman’s highest recession probability since the regional banking crisis two years ago, with the primary driver now being the economic shock from Trump’s intensifying trade war.
Goldman economists pointed to a “sharp recent deterioration in household and business confidence” and statements from White House officials suggesting a willingness to accept short-term economic pain for broader trade policy goals.
Consumer confidence has taken a significant hit in recent months.
The University of Michigan’s latest consumer sentiment survey, released Friday, showed a record number of Americans expecting unemployment to rise, a level not seen since the Great Recession.
Inflation expectations have also surged to their highest in 32 years, adding to concerns about the economic outlook.
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