"The administration's recent dialing down of some of the more draconian tariffs placed on China should reduce the risk that the US economy slips into recession this year," wrote JPMorgan chief US economist Michael Feroli, who had been the first Wall Street economist to call for a recession after Trump's large tariff increase.
"We believe recession risks are still elevated, but now below 50%."
Feroli's logic is simple: Tariffs are essentially a tax. With the latest tariff cuts, the estimated effective US tariff rate has fallen from roughly 24% to 14%. This creates a $300 billion "tax cut" for American consumers that likely would've been swallowing the brunt of the price increases caused by tariffs. Americans paying higher prices and eventually being unable to spend as much was a key part of why economists have been worried about tariffs leading to an economic slowdown.
"The rolling back of this tax should provide some relief to consumer spending, and in our modeling is enough to tip the second-half growth outlook from one of modest contraction to one of modest growth," Feroli wrote.
Feroli isn't alone in believing recession odds are diminishing as the US scales back its tariff escalation. Both Yardeni Research and Goldman Sachs have also lowered their recession odds in reaction to the US pausing the bulk of its tariffs on Chinese goods.
Goldman Sachs' economics team moved its recession probability for the next 12 months down to 35% from a prior forecast of 45% while boosting its GDP forecast to 1% growth for the year, higher than a prior forecast of 0.5%.
Yardeni, meanwhile, now sees 2025 GDP in a range of 1.5% to 2.5%, up from a prior projection in the 0.5% to 1.5% range. Barclays' economics team, which had previously called for a recession, removed its call for an economic downturn in a note to clients on Tuesday.
"We think these lower tariff rates on China will be considerably less disruptive for domestic activity, labor markets, and less inflationary, than prior rates," Barclays chief US economist Marc Giannoni wrote.
Giannoni pointed to how the tariffs on Chinese goods had already led to slower inbound cargo shipments into the US. Economists had cited this as one potential catalyst for the start of a recession, as slower shipments would eventually lead to lower inventory and higher prices for goods. That cycle would lead to consumers buying fewer goods and, eventually, companies being forced to cut employees as their sales slow. The increased likelihood of an eventual lower tariff rate on Chinese goods mitigates this risk.
Liberating or capitulating? President Trump gestures while answering a reporter's question during an event in the Roosevelt Room at the White House on Monday. (AP Photo/Mark Schiefelbein) ·ASSOCIATED PRESS
Still, the more sanguine economic forecasts have provided a boost for stocks.
In the initial reaction to Trump's "Liberation Day" tariffs on April 2, skyrocketing odds of a recession spooked more than 10 Wall Street strategists to slash their year-end target for the S&P 500 (^GSPC).
Now the same trend has been happening in reverse. Yardeni Research President Ed Yardeni pointed out in a Monday night to clients thatthe odds of a recession on popular online betting platform Polymarket have tumbled from 51% last Friday to less than 40% after Trump's China tariff delay.In that same note to clients, Yardeniboosted his year-end target for the S&P 500 from 6,000 to 6,500. The Goldman Sachs equity strategy team made a similar move, now forecasting the benchmark index to end the year at 6,100, up from a prior call for 5,900."We raise our S&P 500 return and earnings forecasts to incorporate lower tariff rates, better economic growth, and less recession risk than we previously expected," Goldman Sachs chief US equity strategist David Kostin wrote in a note to clients.
Some highlights of President Trump's lengthy speech before the US-Saudi Investment Forum, wherein he frequently praised his Saudi host crown prince Mohammad bin Salman andadvancedpeace through deal-making...
Markets Rocking
The stock market is “gonna go a lot higher." He said "People should have listened. We’ve never had anything like this," and he cited the "explosion of investment and jobs." Business executives "weren’t that happy when they saw me,” a month ago, but changed their tune as markets rose," Trump added.
"We are rocking: The United States is the hottest country, with the exception of your country," Trump said, pointing to MbS in the front row before him.
Saudi Arabia as Global Business/Tech Hub
“Mohammed do you sleep at night? How do you sleep?” he said, addressing the crown prince. "Critics doubted it was possible, what you’ve done, but over the past eight years, Saudi Arabia has proved the critics totally wrong."
"...Instead, the birth of a modern Middle East has been brought by the people of the region themselves, the people that are right here, the people that have lived here all their lives, developing your own sovereign countries, pursuing your own unique visions and charting your own destinies in your own way."
Silence befell the crowd as Trump said that it was his "fervent wish" that Saudi Arabia "will soon be joining the Abraham Accords" - but he ultimately conceded that the kingdom will do it in "it's own time".
“It will be a special day in the Middle East, with the whole world watching, when Saudi Arabia joins us. And you’ll be greatly honoring me, and you’ll be greatly honoring all of those people that have fought so hard for the Middle East. And I really think it’s going to be something special — but you’ll do it in your own time. And that’s what I want, and that’s what you want, and that’s the way it’s going to be."
Iran put on Notice
He continued, "I want to make a deal with Iran. I can make a deal with Iran. I’ll be very happy if we’re going to make your region and the world a safer place." He offered a "much brighter future" if Tehran will do a deal.
"If Iran’s leadership rejects this olive branch and continues to attack their neighbors, then we will have no choice but to inflict massive, maximum pressure … and take all action required to stop the regime from ever having a nuclear weapon. Iran will never have a nuclear weapon," he said.
Lifting Sanctions on Syria
"Syria, they’ve had their share of travesty, war, killing in many years. That’s why my administration has already taken the first steps toward restoring normal relations between the United States and Syria for the first time in more than a decade," Trump said.
"The sanctions were brutal and crippling and served as an important — really an important function — nevertheless, at the time. But now it’s their time to shine," he added. So I say, 'Good luck, Syria.' Show us something very special."
"Oh what I do for the crown prince," Trump said to wrap
Blasted NeoCons & Liberal Interventionists
"In the end, the so-called ‘nation-builders’ wrecked far more nations than they built—and the interventionists were intervening in complex societies they did not understand," Trump said.
"The gleaming marvels of Riyadh and Abu Dhabi were not created by the so-called nation-builders, neo-cons, or liberal non-profits like those who spent trillions failing to develop Kabul and Baghdad."
"In Syria, which has seen so much misery and death, there is a new government that we must all hope will succeed in stabilizing the country and keeping peace."
Gaza, Yemen
"The people of Gaza deserve a much better future," Trump said. "But that will or cannot occur as long as their leaders choose to kidnap, torture and target innocent men, women and children for political ends."
Trump also proclaimed that he ordered the cessation of US-Houthi hostilities in the Red Sea, after the Pentagon flexed its military might.
* * *
Update(1005ET): Trump said to be moments away from speaking live from Riyadh after signing hundreds of billions of dollars in US-Saudi investment deals (watch below). "U.S. and Saudi Arabia sign largest defense sales agreement in history—nearly $142 billion, part of $600 billion investment package President Trump and Saudi Crown Prince Mohammad bin Salman signed in Riyadh bringing an infusion of cash to the United States," according to a White House correspondent.
"Today in Saudi Arabia, President Donald J. Trump announced Saudi Arabia’s $600-billion commitment to invest in the United States, building economic ties that will endure for generations to come," a fresh White House fact sheet begins. "The first deals under the announcement strengthen our energy security, defense industry, technology leadership, and access to global infrastructure and critical minerals."
The following represent just a few of the many transformative deals secured in Saudi Arabia:
Saudi Arabian DataVolt is moving forward with plans to invest $20 billion in AI data centers and energy infrastructure in the United States.
Google, DataVolt, Oracle, Salesforce, AMD, and Uber are committing to invest $80 billion in cutting-edge transformative technologies in both countries.
Iconic American companies including Hill International, Jacobs, Parsons, and AECOM are building key infrastructure projects like King Salman International Airport, King Salman Park, The Vault, Qiddiya City, and much more totaling $2 billion in U.S. services exports.
Additional major exports include GE Vernova’s gas turbines and energy solutions totaling $14.2 billion and Boeing 737-8 passenger aircraft for AviLease totaling $4.8 billion.
In the healthcare sector, Shamekh IV Solutions, LLC will be investing $5.8 billion, including a plant in Michigan to launch a high-capacity IV fluid facility.
Investment partnerships include several sector-specific funds with a strong emphasis on U.S. deployment—such as the $5 billion Energy Investment Fund, the $5 billion New Era Aerospace and Defense Technology Fund, and the $4 billion Enfield Sports Global Sports Fund—each channeling substantial capital into American industries, driving innovation, and creating high-quality jobs across the United States.
* * *
If there's one thing that's clear by now, it's that Saudi Arabia and the royal family loves President Donald J. Trump.
For example, in an unusual move and break with protocol, it was Crown Prince Mohammed bin Salman (MbS) who rushed to greet Trump the moment the president stepped off Air Force One at the Royal Terminal on Tuesday.
The greeting was typically lavish, as Trump was received at the Royal Terminal at King Khalid International Airport in Riyadh, after which he and MbS walked a lavender carpet and sat down amid marble columns in navy-and-gold armchairs, as the NYT Times detailed.
"Trump lands in Saudi Arabia to a royal welcome from Crown Prince Mohammed bin Salman," Al-Monitor journalist Elizabeth Hagedorn pointed out. "Biden, by contrast, got the governor of Mecca."
As Air Force One entered the kingdom's airspace earlier Tuesday, Saudi fighter jets escorted it while approaching the Saudi capital.
And later, "The presidential limousine, nicknamed The Beast, was escorted by riders on Arabian horses as it drove to the royal court," NYT detailed.
Among the first major events includes Trump speaking at an investment forum hosted by the Saudi government. Accompanying him are Secretary of State Marco Rubio and Defense Secretary Pete Hegseth, and other top officials.
The investment forum has also seen the Saudi crown prince greet Elon Musk as well as other important tech and silicon valley chief executives, including from BlackRock, Palantir, Nvidia, OpenAI, IMB, CitiBank, and others.
Others eyeing potential investments from the Saudis, include billionaire medical entrepreneur Dr. Patrick Soon-Shiong, owner of The Los Angeles Times.
The president said before cameras upon the start of bilateral talks, "MBS is a friend, we have a good relationship."
"I really believe we like each other a lot," Trump added.
Trump is hoping to secure a $1 trillion investment in US industry from the kingdom, significantly over and above the crown prince’s earlier investment pledge of $600bn, upon this first stop in his Gulf tour which will later include Qatar and UAE.
Importantly, the head of Saudi Arabia’s Public Investment Fund, Yasir Al-Rumayyan, was at the airport with MbS for Trump's grand greeting at the VIP Royal Terminal.
Trump is more of a Diet Coke drinker, (or perhaps there was a remote fear in his mind of being poisoned?)...
President Trump salutes as the Saudis play the American National Anthem...
Florida officials announced that 1,800 state Highway Patrol troopers are the first in the nation to receive federal credentials under an Immigration and Customs Enforcement (ICE) agreement allowing them to arrest illegal immigrants on their own.
Florida Gov. Ron DeSantis said at a press conference on May 12 that the state’s ongoing partnership with ICE included what is known as 287(g) agreements, where state and local law enforcement partner with ICE to help arrest and deport illegal immigrants.
The Florida Highway Patrol entered into a 287(g) task force model that gives them the power to arrest foreign nationals who are in the country illegally and place detainers on them during routine policing, such as traffic stops.
In essence, it allows local law enforcement to operate as an extension of ICE under federal supervision.
DeSantis encouraged other states to support President Donald Trump’s efforts to deport illegal immigrants, noting the success of Operation Tidal Wave. The recent joint federal-state operation arrested more than 1,100 illegal immigrants.
Some of those arrested included members of gangs such as MS-13 and Tren de Aragua, both designated as terrorist organizations by the Trump administration.
Additionally, DeSantis said Florida also swore in 100 troopers as special deputy U.S. marshals, which will allow them to execute federal search warrants and remove dangerous illegal immigrants.
Dave Kerner, director of the Florida Department of Highway Safety and Motor Vehicles, said during the press conference that the Florida troopers are the first fully credentialed law enforcement to be fully operational under the 287(g) task force model.
“What that means is, if you see a state trooper, he or she has federal authorities to detain, investigate, apprehend, and deport,” Kerner said. “We have troopers in all 67 counties of this great state that have that authority.”
Kerner told The Epoch Times that troopers serving as U.S. marshals will be able to go into homes to serve warrants, which isn’t part of the 287(g) agreements.
He said that the programs offer flexibility to state and local jurisdictions, allowing them to determine their level of involvement once they sign up for the agreements.
“It is, by and large, a voluntary effort,” he said. “You can decide how much you want to participate.”
DeSantis added that there’s a plan on the table that, if approved by the federal government, would allow military judge advocates to act as immigration judges and provide makeshift detention space and transportation for illegal immigrants.
The governor noted that the state’s experience with disaster response, such as during hurricanes, helped the state come up with the plan. He said there are 70,000 to 80,000 illegal immigrants in the state, with final deportation orders issued by a judge.
Getting rid of criminal illegal immigrants helps cut down on crime and save lives, DeSantis said.
“You’re really making a difference in your community,” he said.
Some 11 million illegal immigrants were apprehended at U.S. borders over the past four years, according to Customs and Border Protection data.
Trump campaigned on border security and illegal immigrant deportations. Upon returning to the White House, he has moved to keep that promise through a whole-of-government approach that has included designating several Mexican cartels and other transnational criminal groups as terrorist organizations. As a result, some members of the MS-13 and Tren de Aragua gangs have been deported to El Salvador’s Terrorism Confinement Center, known as CECOT.
As of May 8, ICE statistics show there are 531 agreements with state and local agencies throughout the country. Another 105 applications are pending.
Although dozens of states have agreements under the 287(g) program, Florida is the first to have its law enforcement officers credentialed.
Law enforcement nationwide has been encouraged to sign up for 287(g) agreements by the Trump administration because there are not enough federal officers to find and process millions of illegal immigrants.
Besides the task force model, the federal government created the jail enforcement model and the warrant service officer model.
The jail enforcement model allows local officers to identify and process removable noncitizens already booked into local jails. The warrant service officer model allows officers to serve and execute administrative warrants on illegal immigrants already in custody.
Florida had 266 agreements that included all 67 sheriff’s offices in the state, according to the Florida Sheriffs Association. Texas had the second-highest number of agreements at 77.
President Donald Trump’s newly tabbed pardon attorney said on May 13 that his work will include scrutinizing pardons that former President Joe Biden issued just before leaving office in January.
“I do think that the Biden pardons need some scrutiny. And they need scrutiny because we want pardons to matter and to be accepted and to be something that’s used correctly,” Ed Martin, the pardon attorney, told reporters during a press briefing in Washington.
“So I do think we’re going to take a hard look at how they went and what they did and if they’re, I don’t know, but null and void, I’m not sure how that operates,” he added.
Biden’s pardons, issued in his final hours in office, went to multiple individuals, including former Rep. Liz Cheney (R-Wyo.).
Biden said at the time that the people “do not deserve to be the targets of unjustified and politically motivated prosecutions.”
Trump said in March that the pardons were “hereby declared void” because, he alleged, they were done with an autopen, or a device that lets people sign documents with preloaded signatures.
Martin said on Tuesday that the pardons were not particularly reasonable but that he did not necessarily think the use of an autopen would nullify them.
Martin is stepping down as the interim U.S. attorney for the District of Columbia on Wednesday. Trump on May 8 named Martin pardon attorney and director of the Department of Justice’s weaponization working group after some senators publicly opposed Martin’s nomination to take the U.S. attorney post permanently.
Asked later on Tuesday about the resignation of Denise Cheung, who had been chief of the U.S. Attorney’s Office for the District of Columbia’s Criminal Division, Martin said that he had asked Cheung to look into what he described as unprecedented conduct, or $6.7 billion transferred from the government to a nonprofit that was created just six months prior.
That kind of conduct “does make you pause,” Martin said. “That’s what you’re supposed to do, is pause, just like if the Biden pardons are unprecedented in their extent. Right back to when Hunter Biden was whatever age you say, ’that’s uncommon, we ought to take a look at that.'”
Martin also said that the weaponization working group has been looking at various actions taken during the Biden administration, including the prosecution of people who participated in the Jan. 6, 2021, breach of the U.S. Capitol. He said that under him, the group will be giving more updates on its work and is exploring the launch of a portal that will enable people to provide them tips.
