Polymarket gives almost 50% odds of a US recession this year, as Trump’s Liberation Day tariffs exceeded expectations. Crypto and traditional markets alike are cratering, and the future looks uncertain.
Even if Trump decides to amend these tariffs, these plans have already damaged the US’ reputation. Trading partners are making new arrangements without the US, and the tariff calculations were full of discrepancies.
Polymarket Predicts a Recession
Polymarket, an online prediction market, takes odds on a wide variety of topics. Its notoriety increased last year when its users successfully predicted the Presidential election. Today, the ambient fears in the market are being reflected in this platform, as Polymarket’s odds of a US recession increased close to 50%.
The markets were already full of bearish sentiment and recession fears, but a specific event pushed them over the edge. Today is President Trump’s Liberation Day, where he announced tariffs against all the countries in the world. This plan includes a 10% minimum tariff on all allies and trading partners, dramatically exceeding some of the most pessimistic expectations.
Additionally, some discrepancies with the tariffs’ formulation have further contributed to market uncertainty. For example, the executive order claims that uninhabited islands were imposing tariffs on the United States, and one social media user noticed that the calculations were directly copied from a chart on Wikipedia.
Since the crypto market widely expected these tariffs, a few losses were priced in this morning. Unfortunately, even though the industry anticipated a few setbacks, it was not ready for this high level of tariffs. Polymarket’s odds of a recession are increasing dramatically, and the price of Bitcoin has cratered.
Even if the tariffs are reversed, Polymarket’s recession predictions may still come true. The threat of tariffs is already rearranging world trade in a few key ways.
For example, longstanding rivals China, Japan, and South Korea agreed to form a joint response to these tariffs. If the world market sees the US as unreliable, it may focus on new arrangements.
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