Could the U.S. Face a Recession in 2025? Trade War with China Might Shake the Crypto Market Too

The U.S. economy may be on the verge of a significant downturn. Experts warn that if the tariffs imposed during Donald Trump's presidency—particularly against Chinese imports—remain in place, the country could slip into a recession by the summer of 2025. This scenario doesn’t just impact traditional markets—it could also send ripples across the crypto industry.

A New Chapter in the U.S.-China Trade War

During his administration, Trump imposed tariffs of up to 145% on Chinese goods. These measures severely disrupted global supply chains and caused price increases within the U.S. domestic market. According to Torsten Slok, Chief Economist at Apollo Global Management, the consequences could be severe:

“If tariffs stay at current levels, the U.S. will definitely enter a recession in 2025.”

Small Businesses at Risk, Job Losses Loom

Apollo’s analysis forecasts a 4% drop in U.S. GDP if the current tariff environment continues. This economic contraction—especially if it spans two consecutive quarters—would meet the technical definition of a recession. Small businesses would likely suffer the most, with increased bankruptcies and job losses expected.

Federal Reserve Under Pressure to Cut Interest Rates

To ease the pressure, many experts suggest that the U.S. Federal Reserve should implement interest rate cuts. However, no decisive action has been taken yet. Trump himself has criticized Fed Chair Jerome Powell for being slow to react. Without a timely response from the Fed, the effects of a potential recession may deepen.

Supply Chains Are Already Feeling the Strain

According to Bloomberg, U.S. cargo transportation has dropped by 60%, signaling deeper issues in the supply chain. Retail giants like Walmart and Target warn of product shortages, staff layoffs, and a downturn that could mirror the chaos seen during the COVID-19 pandemic.

How Will This Impact the Crypto Market?

Economic uncertainty tends to affect investor sentiment directly. If the U.S. officially enters a recession, investors may shift toward cash and safer assets—leading to a potential short-term drop in crypto prices. Bitcoin and major altcoins could see declines as risk aversion takes hold.

However, in the medium to long term, distrust in traditional financial systems could lead to increased adoption of decentralized assets. Bitcoin, Ethereum, and stablecoins could gain traction as alternatives to fiat currencies. But regulatory uncertainty and economic instability could pose challenges for many crypto projects.

Conclusion

The possibility of a U.S. recession in 2025 is growing, fueled by unresolved trade tensions with China. This scenario could have wide-reaching implications—not just for traditional financial markets, but also for the future of cryptocurrencies. Whether you're an investor or just watching from the sidelines, staying informed and prepared is more important than ever