Scenario 1: Most tariffs imposed since the trade conflict began are negotiated away, but the process is unpredictable.

The U.S. (and Canada, barely) avoid a recession.

Scenario 2: The uncertainty and limited tariffs in the first scenario persist and other US tariffs are added. A long-lasting global trade war unfolds.

The U.S. has a recession that lasts one year, beginning in the middle of 2025. PCE inflation rises to 3% and then falls below 2% in 2027 after the recession ends.