Hikes have already been threatened, rescinded, and then ultimately placed on key trading partners like Canada and Mexico, with increases also placed on imports coming from China.

Since President Trump took office in late January, tariffs have also been placed on goods coming out of the EU, such as steel, with further policy expected to be announced.

Markets have been chided by Deutsche Bank before for failing to take the Oval Office at its word, but research out of the financial giant now shows that analysts are waking up to the threat.

In its March global markets survey—which spoke to 400 market makers across the world—Deutsche Bank found sentiment about the extremity of Trump’s tariff regime is moving towards the upper end.

For example, on a scale of zero to 10 (zero being no additional tariffs and 10 being an extreme regime) the December 2024 average was a five.

By March this had risen to approximately six, with the average dragged up by more analysts answering at the higher end of the scale.

The note penned by research strategist Jim Reid adds: “However, markets are expecting Europe to face a sustained U.S. tariff rate of 18% which feels higher than what is priced in.”

Having asked analysts for their sustained rate, not the peak at which tariffs are likely to start during negotiations, the majority of respondents (26%) said 10% to 15%. However, a further 24% and 22% of correspondents chose 15% to 20% and 20% to 25% respectively.

It comes after Trump adopted a tougher stance on the EU when running for his second term. On the campaign trail the Republican politician said he would make no exceptions for one of America’s closest trading partners, saying: “I’ll tell you what, the European Union sounds so nice, so lovely, right? All the nice European little countries that get together.”

Per Reuters, he added: “They don’t take our cars. They don’t take our farm products. They sell millions and millions of cars in the United States. No, no, no, they are going to have to pay a big price.” 

This threat has been followed up since, with Trump telling his cabinet in February that while he “loves the countries of Europe,” the EU had been formed to “screw” the United States, saying: “That’s the purpose of it. And they’ve done a good job of it.”

As Reid points out, this higher-for-longer outlook amid tense geopolitics goes beyond the market’s current pricing strategy. As JPMorgan Chase CEO Jamie Dimon recently pointed out, tariffs can do “good stuff” that is only modestly inflationary by “0.1% or 0.2%.”

However the man paid $39 million for his work in 2024 added that a universal 25% tariff on all imports would be, in his view, “quite recessionary and inflationary.”

Recession fears tip over 40%

Ahead of the election, voters generally expected President Trump’s policies to be better for the economy than then–Vice President Kamala Harris’s.

However in the months since fears of recession have crept higher, with Reid reporting the average expectation for an American recession now sits at around 43%.

That being said, there was a great range in opinions on the matter. Of the 400 respondents, 20% placed the likelihood of a recession in the next 12 months at between 20% to 30%.

Meanwhile, 17% and 15% of respondents said the likelihood is between 30% to 40% and 40% to 50% respectively.

A further 23% of respondents put the likelihood at more than 60%, demonstrating the range of outcomes the market is currently bracing for.

Likewise the opinion even within Trump’s own cabinet appears divided.

Commerce Secretary Howard Lutnick, for example, told NBC earlier this month: “Donald Trump is bringing growth to America. I would never bet on recession. No chance.”

Meanwhile Trump’s Treasury Secretary, Scott Bessent, said a matter of days later “there are no guarantees” that America won’t have a recession.

Speaking to Fox Business, Bessent said: “I can’t guarantee anything… But what I can guarantee you is that there is no reason we need to have a recession.”