President Donald Trump’s sweeping tariffs have spawned a flurry of new markets on Polymarket, a crypto-based betting platform.
Trump had long hinted he would impose what he called “reciprocal tariffs” on countries around the world. But the size and scope of Wednesday’s tariffs took market watchers by surprise.
Before Wednesday, bettors on Polymarket placed the chance of a recession at 39%. Just before markets closed New York time Thursday, that had jumped to 48%.
Bettors on the platform put the chances inflation would spike above 4% at 17% Wednesday. By Thursday, that figure had jumped to 47%.
That’s largely because bettors have wagered that the tariffs won’t be a short-lived negotiating ploy — at least, not for some of the US’ largest trade partners.
The chances Trump removes tariffs on Mexico by May dropped from 30% to 22% on Polymarket over the past 24 hours. The chances he removes tariffs on Canada by May dropped from 24% to 19%.
But the chances he increases those tariffs this month have also plummeted, suggesting bettors think Wednesday’s announcement will be the last to roil North American trade — for the next 27 days, at least.
Polymarket bettors wager there’s a one-in-three chance Trump lowers tariffs on the European Union this month. And, though wagers placed in the immediate wake of the tariff announcement had Trump’s removal of a worldwide, 10% tariff minimum at 40%, that has since dropped to 9%.
Since they were announced Wednesday, the S5P 500 fell almost 5%, and the Nasdaq fell almost 6%.
In a Wednesday evening note, JPMorgan analysts said the tariffs could boost inflation by as much as 1.5%. The hit to US consumers’ purchasing power increases the risk that spending will drop in the second and third quarters of 2025.
“This impact alone could take the economy perilously close to slipping into recession,” the analysts wrote.
“And this is before accounting for the additional hits to gross exports and to investment spending.”
Bettors on Polymarket also see inflation jumping in 2025.
Fueled by pandemic-era government spending and supply chain issues, prices began surging in 2021. In the US, the Federal Reserve raised interest rates in a bid to push price growth down to a modest 2%.
It largely succeeded — as of February, so-called core inflation was 3.1%, and in March the Fed said it believed inflation would drop to 2.8% over the course of 2025.
Polymarket bettors were less sanguine. Since the latest tariffs were unveiled, the chance inflation would remain above 3% jumped from a coin toss to 71%.
To be sure, some markets were created in the wake of Trump’s “Liberation Day” announcement, and they have seen little volume as of Thursday afternoon. A single, large bet could dramatically alter the chances of any particular outcome.
But mixed messages from Trump’s economic team have left investors guessing as to the ultimate purpose of the tariffs.
Some supporters have said it’s a negotiating ploy meant to force countries to drop longstanding levies on US goods. But others have said the tariffs are meant to serve as a new, enduring source of revenue for the US government.
Aleks Gilbert is DL News’ New York-based DeFi Correspondent. You can reach him at aleks@dlnews.com.
