US CEOs brace themselves for recession even after Trump tariff reprieve boosts stocks

DALLAS – US President Donald Trump’s 90-day reprieve on some tariffs sent the stock market soaring. But the chaos sown by his trade war means corporate America is planning for a recession.

Corporate chiefs from Delta Air Lines to Walmart are warning of a wave of pessimism that is swamping demand and making it difficult to predict what is to come.

Mr Jamie Dimon, the JPMorgan Chase & Co chief executive officer, said on April 9 that defaults will rise as the economy worsens.

Carmakers are offering fresh discounts or pledging to hold prices steady in a bid to lure consumers scared off by talk of tariffs.

Comments from Delta CEO Ed Bastian exemplified the dread. Reminded that in March he had said he did not think the US was headed into a recession, Mr Bastian conceded to an interviewer on CNBC that things had changed.

“We’re acting as if we’re going into a recession,” he said. 

“Whether you’re a corporate manager trying to figure out whether you want to step forward on an investment, whether you’re a bond trader or in the markets trying to allocate capital, or even as a consumer, I think everything has stalled” because of uncertainty tied to Mr Trump’s policies, he told CNBC.

Mr Trump, who came to office on a pledge to bolster economic growth and fortify the US economy, is instead unleashing a wave of panic across markets and businesses as consumers and investors try to make sense of his policies and their impacts.

On the afternoon of April 9, he said he would pause higher reciprocal tariffs for 90 days on dozens of trade partners while raising duties on China to 125 per cent, an about-face that came roughly 13 hours after higher reciprocal duties on 56 nations and the European Union went into effect.

It was not immediately clear which nations would receive tariff relief, but stocks soared after the announcement, lifting the S&P 500 Index to its biggest one-day gain since 2020.

The benchmark US gauge had been headed to a bear market, approaching a 20 per cent decline from its peak.

When asked whether Americans should believe the reprieve will hold and tamp down fears over heightened uncertainty, Treasury Secretary Scott Bessent said: “The only certainty we can provide is that the US is going to negotiate in good faith, and we assume that our allies will too.”

Goldman Sachs Group economists rescinded their forecast for a US recession after the announcement, but for Mr Mike Roach’s business, “the recession has already started”.

The co-founder of Portland, Oregon-based apparel company Paloma Clothing said sales have dropped 11 per cent from a year ago, he is running three discounts at once and is thinking about pulling back on summer hiring.

“By pausing the tariffs today – that’s great for today, the market will go up,” he said.

“The reality is, it still leaves us in a very uncertain environment.”

Walmart, the world’s largest retailer, is prepping for a worsening economy by using its massive footprint to keep prices low and hunt for ways to take market share as tariff-spooked shoppers begin pulling back on spending.

The company said on April 9 that it still sees net sales growing 3 per cent to 4 per cent in 2025, and plans to absorb potential price hikes fuelled by the trade war and take a short-term financial hit to keep products affordable for its customers.

“The uncertainty and decline in consumer sentiment has led to a little more sales volatility week to week and frankly day to day,” chief financial officer John David Rainey said on April 9.

Walmart is working through how the new tariff environment would affect its operations, Mr Rainey added.

Investors have been dumping bonds of retailers that were already facing headwinds before the tariffs, figuring they are among the most vulnerable to any economic slowdown.

By the end of last week, the amount of US corporate debt classed as distressed had soared by more than 32 per cent since the end of February, according to Bloomberg News’ distressed debt tracker.

Catalyst Brands, the company that was formed through the merger of JCPenney and the operator of retailers including Lucky Brand, Eddie Bauer and Aeropostale, is cutting about 9 per cent of its corporate staff, Bloomberg News reported.

That is on top of a 5 per cent cut to corporate roles earlier in 2025.

Some retailers are getting a temporary lift from panic buying as consumers stock up on goods or push forward big purchases in anticipation of higher prices coming from tariffs.

Vehicle dealerships have reported a swarm of shoppers descending on showrooms, concerned higher costs are on the way.

Employees from Apple retailers across the country said stores filled with customers over the weekend – with the shoppers expressing concerns that prices will climb dramatically after the levies are imposed.

Most iPhones, Apple’s best-selling and most important product, are manufactured in China.

BLOOMBERG