UCLA Anderson Forecast predicted in March that, if enacted, the Trump administration’s economic policies will lead to recession.

Clement Bohr, the economist who authored the recession watch report, cited concerns about President Donald Trump’s tariff policies, mass deportations and Elon Musk’s Department of Government Efficiency – an initiative to cut federal spending. Bohr said he is now questioning whether the economy is still salvageable.

“Usually you can’t see recessions coming if they do happen,” Bohr said. “It’s rare that the administration is coming in and vowing to implement policies that could lead to a recession.”

President Trump imposed a global tariff rate of 10% on all imported goods from trade partners except China, on which he imposed a 145% tariff, according to the White House. China retaliated by increasing tariffs on U.S. imports to 125% on April 11, according to Reuters.

“We were expecting severe tariffs and what we’re getting now is just unfathomable – way beyond even what our worst-case scenario was,” Bohr said.

William Yu, an economist for the Anderson Forecast, said there is a manufacturing imbalance between the U.S. and China.

“There’s a fundamental imbalance,” Yu said. “The key is just between these two largest economies in the world – United States, who has a huge trade deficit, and China, who has a huge trade surplus.”

The U.S. international trade in goods and services deficit was $122.7 billion in February – meaning the U.S. imported more than it exported, according to the U.S. Bureau of Economic Analysis. China, however, had a trade surplus of $102.64 billion in March, according to Reuters.

Yu added that he projects a 1.1% to 1.5% increase in prices due to the current tariffs. He added that the U.S. will have lower gross domestic product growth this year and a recession could follow depending on the extent of that decline.

Bohr said Trump’s tariff policies will lead to economic contractions in multiple sectors. These combined elements could also trigger a recession, he said.

“The economic policies are going to contract the manufacturing and retail and trade sectors through tariffs,” Bohr said. “They’re going to contract the government sector through DOGE and they’re going to contract construction and agriculture through mass deportations – and those things combined could lead to a recession.”

The Trump administration has proposed deporting 1 million people without legal status in private conversations, according to the Washington Post.

Margaret Peters, a professor of political science, said the mass deportation of immigrants will result in higher prices, including of food, and less labor. People without legal status disproportionately work in certain industries, such as construction, agriculture and hospitality services, she added.

“By having fewer immigrant workers, the products we make will get more expensive because there’s less people producing them, and then that means that those goods won’t be as competitive on international markets,” Peters said.

Trump’s proposed deportations will impact California’s economy more than other states, Bohr said. They may also have an impact on the state’s construction industry, he added.

“Some of these policies, like the deportation policy, are going to have a much larger effect on California than, say, some of the other U.S. states,” Bohr said. “With construction and the deportations, California has one of the worst housing supply crises right now. We’ve just had the big fires, and so again, that’s also a policy that’s going to impact California more than other states.”

DOGE, a new government initiative, has accessed federal data systems, organized large-scale layoffs of federal employees and cut funding for environmental initiatives, scientific research and diversity, equity and inclusion programs.

DOGE’s aggressive spending cuts are unprecedented, Bohr said.

“DOGE was much more aggressive than what people expected in its attempt to contract the size of the federal government, both in terms of employment, but also in terms of expenditures, in terms of canceling contracts of his contractors,” Bohr said. “​​Now there was a third sector, essentially a third part of the economy that the government’s policies were trying to contract.”

The report said that the fragility of the financial sector – with overvalued stocks and speculative bubbles in artificial intelligence and cryptocurrency – may increase economic decline. Proposed workforce cuts to the Internal Revenue Service could result in hundreds of billions in evaded taxes, provoking a loss in confidence in the value of U.S. debt, according to the recession forecast.

Bohr said he encourages UCLA students to continue their education in the wake of market instability.

“There is a real risk that ​​we’re going to be entering a recession purely because of this tariff policy, and it means that it’s going to be hard to find a job. Usually in recessions, an alternative good outcome – rather than trying to find a job in the labor market, where it might not be easy to find one – is to do further education,” Bohr said. “If you can’t go out and get a job, you can continue to invest in yourself.”