Torsten Slok, chief economist at Apollo Global Management, is confident that if tariffs exist, the US will fall into a recession this year. “This is all subject to tariffs that stay at these levels, and if they stay at these levels, they will definitely have a recession in 2025,” Sloak told CNBC’s “Squawk on the Street” on Monday. If the high tariffs introduced earlier this month come into effect again this month, two-quarters of economic output could shrink by 90%, and gross domestic product could fall by 4 percentage points, according to private equity firm economists. On April 9, President Trump gave 90 days to many tariffs and hiked them to 145% of China. The Sloke’s recession forecast is China’s tariffs. He argues it is especially harmful to small businesses who are unlikely to keep enough cash on hand to pay higher taxes on imported goods. “They basically don’t have the money and cash to pay the 145% extra,” Sloak said. “So if this is allowed to continue, there will be bankruptcy of very large retailers.” According to Sloak, who worked at Deutsche Bank and Bank of America after stints with the IMF and OECD, sluggish employment, sentiment, in retail, would undermine the labour market and consumer sentiment, as small businesses with fewer than 500 workers account for 80% of total employment. Special attention should be paid to weekly unemployment claim reports, as weaknesses in the job market appear first. “The impact of tariffs, especially on China, remains a huge and heavy, especially on small and medium-sized businesses,” Slok said. “And we haven’t seen it with the claims of unemployed yet, but we should expect to see it.” While the call to a recession grew on Wall Street in April, frequent tariff changes have made it nearly impossible for forecasters to measure the full impact. Earlier this month, shortly after the April 2 announcement of JPMorgan Asset Management, David Kelly of JPMorgan Asset Management said there is a 60% chance of a recession depending on whether high tariffs are maintained. Get tickets for Pro Live Join us on the New York Stock Exchange! An uncertain market? Earn Edge with CNBC Pro Live, the first exclusive event on the historic New York Stock Exchange. Access to expert insights is paramount in today’s dynamic financial situation. As a CNBC Pro subscriber, we recommend attending the first exclusive and in-person CNBC Pro live event held at the iconic NYSE on Thursday, June 12th. You will also get the opportunity to network with CNBC experts, talent and other pro subscribers during exciting cocktail hours on the legendary trading floor. Tickets are limited!
