Cathie Wood, CEO of Ark Invest, on Friday warned that President Donald Trump’s new tariffs could push the U.S. economy into a recession but remained optimistic that innovation and smart policy could lead to a recovery.
What Happened: During an “Employment Friday” session, Wood analyzed the potential effects of Trump’s newly imposed tariffs, which include a universal 10% base tariff on all imports and specific country tariffs, including 34% on China and 26% on India.
“Markets are in quite a bit of turmoil,” Wood said, addressing the uncertainty created by these measures. She cautioned that these policies could push the U.S. into a recession, adding,
“We know how he calculated his version of reciprocity, but it doesn’t seem to make very much sense,” she stated.
However, Wood also expressed hope that, with the right strategic policies, such as tax cuts and deregulation, the economy could eventually stabilize and grow. She also pointed to the lessons learned from the 2008 financial crisis, where market recovery began in late 2008 despite widespread financial turmoil.
She shared the video on X and said that the current situation could also be seen as a potential turning point.
“Innovation gains traction during tough times,” she said, referencing how businesses and consumers are often more willing to adapt and change when facing economic uncertainty.
She pointed to technological advances in AI, blockchain, and robotics as key factors that could help drive recovery.
“We are in the eye of the storm,” Wood said. “But if President Trump cares about his legacy — which we know he does — or the midterm election campaign season, which will start this fall, then the last leg of this rolling recession is giving him and the Fed more degrees of freedom to pivot.”
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Why It Matters: The stock market saw a sharp decline on Friday, with S&P 500 companies shedding $5 trillion in value following Trump’s announcement of sweeping tariffs on Wednesday.
The Nasdaq officially entered bear market territory, falling more than 20% from its all-time peak.
Federal Reserve Chair Jerome Powell remarked on the surprising scale of Trump’s tariffs, warning they could lead to increased inflation and dampen economic growth. At the same time, JP Morgan raised its projection for a recession, estimating a 60% likelihood by the end of the year.
On Friday, former Microsoft CEO Steve Ballmer also voiced concern that newly imposed tariffs could spark global instability and hurt consumers.
On the other hand, JPMorgan analyst Thomas Kennedy views the tariffs as a possible driver of major long-term change, arguing that they signal the end of the globalization era.
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