Negative impacts from President Donald Trump’s intensifying global trade war could include stagflation and an even more drastic drawdown in the stock market, according to Torsten Slok, Apollo Global Management’s chief economist. The widely-followed economist sees a dire situation emerging in the tariff chaos, leading him to conjure up a host of downside risks to the economy and markets. “When we write down a list of bullet points of thinking about what are the upside risks to the economy and what are the downside risks to the economy, the list only consists of downside risks at the moment,” Slok said during a conference call with investors Friday. If tariffs stay at their current levels, the economist estimates that U.S. GDP will be 1.5% lower than would have been the case, while inflation is expected to increase by 1.5 percentage points. GDP accelerated at a 2.3% annualized rate in the fourth quarter and at a 2.8% pace in all of 2024. “This tells you what the textbook would predict, that trade war, by definition, is a stagflationary shock, where GDP will be lower and inflation will be higher,” Slok said. .SPX YTD mountain S & P 500 in 2025. On Friday, China retaliated against the sweeping tariff plan, and Trump vowed his economic policies “will never change.” The stock market slumped for a second day, posting back-to-back declines of almost 5% and nearly 6%. The S & P 500 now sits more than 17% off its all-time high set just six weeks ago. Slok said Trump’s trade fight is fueling a $6 trillion decline in the S & P 500 from the Feb. 19 peak. S & P 500 companies lost another $2.7 trillion in market cap on Friday, according to S & P Dow Jones Indices. Magnificent Seven stocks — Nvidia , Apple , Amazon , Alphabet , Meta , Tesla and Microsoft — collectively lost more than $1 trillion in collective market value on Thursday alone. The tech-heavy Nasdaq Composite fell into a bear market, down almost 23% from its December high, in Friday’s market turmoil. “The Magnificent Seven stand out in terms of being particularly hard impacted, because a lot of their revenues comes from abroad,” Slok said. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
