Allison Schrager, Columnist

Tariffs Will Be Bad, But They Won’t Cause a Recession

High taxes on imports would hurt growth, but the US economy can probably withstand them.

May 8, 2025 at 9:00 AM UTC

Allison Schrager is a Bloomberg Opinion columnist covering economics. A senior fellow at the Manhattan Institute, she is author of “An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk.”

That’s a lot of trade.
Photographer: STR/AFP

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Markets are desperate for good news about tariffs — or no news at all. It only took a pause on the reciprocal tariffs and vague promises of future trade deals for the bond market to stabilize and stocks to recover. And despite the continuing uncertainty and the potential for more disruption, it seems markets are not pricing in a recession.

Are traders deluded? Irrational? Or do they know something that too many prognosticators do not — namely, that tariffs will not bring about an economic calamity.