U.S. President Donald Trump's sweeping reciprocal tariffs have sent shockwaves through global financial markets on Thursday, while further souring U.S. growth estimates and sharply driving up the recession expectations.

The odds of a U.S. recession this year have surged to 54%, as per New York-based financial exchange and prediction market Kalshi. That's the highest level since late September last year. 

Kalshi also noted that U.S. recession odds in Q1 2025 had been as low as 17%.

According to Fitch Ratings, Trump's "Liberation Day" tariffs result in an overall U.S. effective tariff rate last seen over a century ago in 1909. They also "significantly" raise U.S. recession risks. 

"The president’s highly anticipated tariff announcement...delivered at the very hawkish end of the range of expected outcomes ... By our calculations this takes the average effective tariff rate from what had been prior to (yesterday’s) announcement around 10% to just over 23%," JPMorgan's Michael Feroli said.

Feroli also said that the reciprocal tariffs could boost personal consumption expenditure prices by 1% to 1.5% this year.

"The resulting hit to purchasing power could take real disposable personal income growth in 2Q-3Q into negative territory, and with it the risk that real consumer spending could also contract in those quarters. This impact alone could take the economy perilously close to slipping into recession," he added. 

U.S. stocks (SP500)(COMP:IND)(DJI) cratered on Thursday as sentiment globally was hammered by Trump's tariffs.

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