The U.S. economy has long been one of the primary drivers of global growth. However, in recent years, economic uncertainties, shifts in monetary policies, and global challenges have fueled debates and raised concerns about whether the U.S. economy is heading toward a recession. If so, will this recession trigger a “domino effect” on the economies of European countries and the global market? Will the U.S. continue to grow at a high rate in the long term, or will it be overtaken by India and China? What impact will the so-called “Trumpism on the Economy,” centered on the “Tariff War,” have?

By analyzing facts, expert opinions, and reports in the global press, we can assess where U.S. economic policy is headed and whether a recession is imminent, taking into account key economic policies, current indicators, and future prospects.

Economic Policy and the “Tariff War”

In late January 2025, President Trump announced a 25% tariff on imports from Mexico and Canada, set to take effect on February 1, 2025. This measure was implemented in response to concerns over drug trafficking and illegal immigration. However, on March 6, 2025, after a phone call with Mexican President Claudia Sheinbaum, President Trump announced the temporary suspension of these tariffs until April 2, 2025. Shortly afterward, he reaffirmed this trade policy in discussions with both Mexico and Canada.

At the same time, President Trump introduced a 10% tariff increase on Chinese imports, effective February 1, 2025, followed by another 10% increase announced in early March. China reacted immediately with countermeasures. Recently, President Trump has turned his focus to U.S.-EU trade relations, proposing tariffs on European imports in industries such as automobiles, lumber, and pharmaceuticals, along with a swift move to impose a 200% tariff on European alcoholic beverages. In response, affected countries have warned of retaliatory measures. This has led to increased uncertainty in global markets and widespread debate among economic analysts.

Adding to this uncertainty is the role of the president’s advisor, Elon Musk, who has pledged to restructure the federal administration to enhance efficiency. His proposed reforms include:

-Reducing government spending by eliminating ineffective programs.

-Cutting bureaucracy in the public sector.

-Implementing automation technologies to streamline government processes, potentially reducing the need for workers in some sectors.

These changes are expected to result in substantial job cuts within public administration. Many experts warn that such policies could create pressure on the labor market and potentially lead to a decline in consumer spending due to fears of unemployment.

Another anticipated consequence of President Trump’s economic policies is rising inflation. Increased tariffs will ultimately be borne by American consumers, leading to higher prices for goods.

Will the U.S. Economy Enter a Recession?

Economic experts agree that Americans are highly focused on numerical indicators and seek to quantify every economic trend. The same principle applies to economic analysis in the U.S., where data measurement, though sometimes inconsistent, provides a comprehensive view of economic conditions. In this context, we examine key indicators to assess the potential for a recession.

1. The Stock Market

The past two weeks have seen significant volatility, with sharp declines in key stocks. Between early and mid-March 2025, the S&P 500 dropped by 4.7%, while the NASDAQ fell by 4.8%. Given the market capitalization of these indices, these losses translate into trillions of dollars in diminished stock value. Notably, major technology stocks—including Tesla, Nvidia, Meta, Amazon, and Alphabet—experienced significant declines during this period.

2. The Slight Depreciation of the U.S. Dollar

Concerns over inflation and a weakening dollar have led to a capital shift from the U.S. market to European markets, particularly in defense-related industries. The euro/U.S. dollar (EUR/USD) exchange rate has fluctuated significantly in recent months. In early February 2025, the euro was trading at around 1.01 U.S. dollars. A Reuters survey at the time found that nearly a third of currency strategists expected the euro to reach parity with the dollar or drop below it. By early March 2025, the euro had risen to approximately 1.09 U.S. dollars.

Exchange rate fluctuations are influenced by multiple economic and geopolitical factors. The capital movement from the U.S. to Europe indicates that investors holding dollar-based assets in American markets have experienced a significant decrease in their investment value over the past month.

3. The Enormous Debt of the World’s Largest Economy

Ray Dalio, the founder of Bridgewater Associates—one of the world’s largest hedge funds—has repeatedly expressed deep concerns about U.S. debt and its global implications. Dalio warns that the U.S. faces historically high levels of both public and private debt. He argues that this situation is unsustainable and, if not managed properly, could trigger a financial crisis.

One of Dalio’s key concerns is the potential decline of the U.S. dollar’s status as the world’s reserve currency. He believes that high debt levels, inflation, and rising competition from alternative currencies—such as the Chinese yuan—could gradually erode the dollar’s global dominance.

Dalio views economic cycles through the lens of “debt cycles,” arguing that the U.S. is at a critical juncture in this cycle. He advocates for structural reforms, including reducing government spending and increasing productivity, to prevent an impending crisis. Dalio compares debt accumulation to plaque buildup in arteries, warning that it could lead to a “financial heart attack.”

To mitigate the risks of a debt crisis, Dalio proposes reducing the federal budget deficit to 3% of GDP. He cautions that failure to address the issue could result in a sharp rise in interest rates, potentially leading to a recession. In his forthcoming book, How Countries Go Broke, Dalio analyzes historical debt cycles and provides guidance on recognizing and managing extreme debt situations.

When asked about the timing of a potential U.S. economic crisis, Dalio asserts that a crisis is inevitable, but its exact timing is uncertain. It could occur in five months, five years, or even fifteen years. While Dalio cannot predict the exact moment of a recession, it is widely acknowledged that economic cycles are an inherent part of market development.

Meanwhile, President Trump’s economic policies aim to ensure sustained economic growth in the coming decades. / Panorama

*Academician Prof. Dr. Anastas Angjeli is an economy expert, former Minister and SP MP, founder and president of the Mediterranean University of Albania