Economist Slok Warns 90% Recession Chance If Tariffs Persist

Torsten Slok, chief economist at Apollo Global Management, predicts a 90% chance of a U.S. recession in 2025 if current high tariffs, especially those on Chinese imports, remain in place. He warns that small businesses, which make up about 80% of U.S. employment and a significant share of investment, are particularly vulnerable because they lack the working capital to absorb steep tariff increases—such as the recent 145% levy on Chinese goods. Slok argues that these businesses could face widespread bankruptcies, resulting in job losses and negative consumer sentiment, as they cannot easily obtain exemptions or lobby for relief like large corporations. He describes this scenario as a 'Voluntary Trade Reset Recession,' emphasizing that the adjustment costs of the trade policy fall disproportionately on smaller firms. The resulting downturn in the retail sector and broader economy could ultimately shave up to four percentage points from U.S. GDP. While the administration has temporarily paused some tariffs, the persistent volatility and high import duties have made it difficult for forecasters to gauge the full economic impact.