Polymarket Signals Nearly 50% Chance of US Recession Amid Tariff Shock

Polymarket, a well-known prediction market, has raised alarms about the likelihood of a US recession this year, placing the odds at nearly 50%. The shift in sentiment follows former President Donald Trump’s Liberation Day tariffs, which surpassed even the most pessimistic projections. The sweeping trade restrictions have sent ripples through both cryptocurrency and traditional financial markets, sparking uncertainty about the economic future.

Market Reactions to Liberation Day Tariffs

Trump’s Liberation Day announcement introduced a minimum 10% tariff on imports from all US allies and trading partners. This broad and aggressive policy stance stunned analysts, many of whom had anticipated more moderate measures. The unexpected scale of the tariffs, combined with inconsistencies in their formulation, has further fueled economic uncertainty.

Critics were quick to point out discrepancies in the tariff framework. Social media users noted that some tariff calculations appeared to be directly copied from a publicly available Wikipedia chart. Additionally, some elements of the executive order referenced trade restrictions against uninhabited islands, raising further concerns about the policy’s coherence and accuracy.

Polymarket’s Recession Prediction

Polymarket, which gained prominence after accurately forecasting previous political events, has reflected growing economic anxiety. The platform’s users have placed the probability of a US recession at nearly 50%, highlighting widespread fears that the economy could contract under the weight of these aggressive trade measures.

Cryptocurrency markets, which had anticipated potential tariff-related losses, still suffered sharp declines following the announcement. Bitcoin and other major digital assets saw significant drops, signaling broader financial unease.

Long-Term Trade Implications

Even if the tariffs are adjusted or reversed, their impact on global trade relations could be long-lasting. Key international partners, wary of US policy volatility, are already seeking alternative trade arrangements. Notably, China, Japan, and South Korea have initiated joint discussions to develop a coordinated response to the tariffs. If global markets perceive the US as an unreliable trade partner, there could be a lasting shift toward alternative economic alliances.