The recent implementation of President Trump's extensive tariff measures has significantly shaken investor confidence, resulting in a steep decline in the stock market and escalating concerns about a potential recession.

As the financial world grapples with the implications of the administration's decision to pause tariffs for a 90-day period, investors are left wondering how much of an economic slowdown has already been factored into the recent stock market sell-off. The uncertainty surrounding future trade policies has raised alarms among market analysts and investors alike.

According to Callie Cox, chief market strategist at Ritholtz Wealth Management, the stock market may not have fully absorbed the likelihood of a recession. She expressed her concerns in an interview with Yahoo Finance, stating, "I'm not sure the stock market has quite processed the probability of a recession. Usually when you get a recession, you get a bear market, or you get the [S&P 500] falling a lot more than it has." This perspective is underscored by historical trends, indicating that during previous recessions, the stock market has typically experienced sharper declines.

In fact, an analysis of the S&P 500 (^GSPC) reveals that the index has historically undergone a more substantial drawdown compared to this year's peak-to-trough decline of 18.9%. Since 1973, every recession has seen a more pronounced drop in the index. This trend suggests that if a recession is indeed triggered by Trump's tariff policies, and if the S&P 500 does not reach new lows, this year's decline could represent the mildest market reaction to an economic downturn in over half a century.

Further insight into market sentiment comes from Mike Wilson, chief investment officer at Morgan Stanley. In a note to clients dated April 13, he remarked, "The market correction is well advanced, but probably not complete IF we end up in a recession or the fear of one gets more fully priced." This indicates that the current market volatility may not be over yet.

The economic ramifications of Trump's tariffs have been analyzed by numerous economists, with many asserting that the likelihood of a recession is increasing. The newly imposed tariffs are anticipated to contribute to rising inflation while simultaneously hindering economic growth. Goldman Sachs recently estimated that the probability of a recession occurring within the next year stands at 45%, which is significantly higher than the historical average of just 15% over any 12-month period.

Furthermore, JPMorgan has released forecasts predicting an impending recession later this year, aligning with the views of Neil Dutta, the head of economics at Renaissance Macro. In a more pessimistic assessment, Mark Zandi, chief economist at Moody's Analytics, estimates the chances of a recession at 60% within the next year. Zandi remarked that if the Trump administration chooses to backtrack on some of the proposed tariffs, the economy might avoid a downturn. However, he expressed skepticism about such a resolution occurring in the near future, stating, "That doesn't feel like what's going to happen, at least not right now."

In light of these growing recession fears, Wall Street strategists have been proactive, responding by lowering their price targets for the S&P 500 as they reassess the market landscape. Investors are now navigating a climate of uncertainty and caution as they consider the potential implications of ongoing trade policies on the broader economic environment.