Will a Trade War Tip the Global Economy Over the Edge?

Mark Zandi, Chief Economist of Moody’s Analytics, joined The Call to break down the escalating trade tensions, the 125% tariff spike on China, and why markets—and policymakers—should be worried.

Key Takeaways

Recession Risk Is Now the Base Case: Zandi pegs the probability of a U.S. recession this year at 60%, calling it “uncomfortably high and moving in the wrong direction.”

Tariffs Are a Tax on Growth: “There are no winners,” he said of recent tariff regimes. “Everyone is a loser.” According to Zandi, research shows productivity has fallen in targeted industries due to reduced competition.

Uncertainty Is Freezing Business Decisions: “Everyone is now sitting on their hands,” Zandi said. The fog of policy unpredictability is already slowing economic activity and risks tipping the economy into contraction.

The Bond Market Is Flashing Warning Signs: Investors are beginning to question the U.S.’s safe-haven status. Zandi warns, if the U.S. loses that, it “has all kinds of very negative economic consequences for the U.S. in the long run.”

The U.S. May Be More Vulnerable Than It Thinks: Zandi challenges the idea that China has more to lose: “We may be at just as much risk, if not more.”

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Written by Masha Angelova, Editorial Producer