US Recession Inevitable If High Tariffs Remain, Apollo’s Top Economist Warns

Apollo Global Management’s (APO) Chief Economist Torsten Slok said on Monday that the U.S. would fall into a recession if tariffs stayed the same.

“It’s all conditioned on tariffs staying in place at these levels, and if they stay at these levels, we will absolutely have a recession in 2025,” Slok told CNBC.

Trump had announced a 10% universal tariff on all imports into the U.S. as well as much higher reciprocal tariffs on some of the country’s biggest trading partners on April 2.

Later, he paused most of the reciprocal tariffs for 90 days but hiked the tariff on China to 145%.

If the high tariffs remain in effect, the odds of a two-quarter contraction in economic output stand at 90%, with gross domestic product dropping by 4%, Slok said.

The private equity firm’s top economist believes that the China tariffs could severely harm small businesses, which employ the most significant share of the country’s workforce.

“They basically do not have money and cash to pay 145% extra,” Slok said before adding, “So, we will have bankruptcies of retailers of very significant magnitudes if this is allowed to continue.”

Slok added that job reports would likely be the indicator that shows the impact of the China tariffs.

“The impact of tariffs, especially on China, is still weighing heavily, in particular, on small businesses,” Slok said. “And we have not seen that in jobless claims yet, but we should expect to see that.”

The Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100, was up 0.5% in after-hours trading, while the SPDR S&P 500 ETF Trust (SPY) rose 0.4%.

Wall Street’s major indices fell on Monday after Trump’s criticism of Federal Reserve Chair Jerome Powell spooked investors.

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