Week 11 of Trump’s second term was arguably his most consequential so far. On Wednesday, Trump announced tariffs on almost every country in the world, in addition to raising tariffs on other countries.
The economic shock of more expensive goods dominated the news in the lead-up to and fallout from “Liberation Day.”
While most of the week concerned economic news, traders at prediction market platforms Polymarket, Kalshi, and PredictIt are betting on the news’ consequences.
Will there be a recession this year?
Price Highlights: Kalshi traders give the United States a 62% chance of experiencing a recession in 2025, up from 43% before Trump’s “Liberation Day” tariff announcement.
Settlement Terms: The market will settle to ‘Yes’ if the United States experiences negative GDP growth for at least two consecutive quarters.
Analysis: After Trump’s Liberation Day announcement of tariffs on countries the United States has trade deficits with, concerns about a recession skyrocketed. Tariffs are import taxes that are meant to make domestic products more competitive by making foreign goods more expensive. Trump claims to want to revive American manufacturing, but many economists worry that reducing buying power so abruptly could trigger a recession that doesn’t lead to the payoff Trump claims it will.
Who will be the first Cabinet member to leave?
Price Highlights: The three most likely Cabinet members to leave first, according to the current market at PredictIt, are Howard Lutnick (15%), Scott Bessent (13%), and Pete Hegseth (13%).
Settlement Terms: The first person to no longer formally hold their position in Trump’s Cabinet will resolve the market.
Analysis: Treasury Secretary Scott Bessent is a newcomer to the top three Cabinet officials most likely to leave first. The New Republic reported that Bessent was looking to leave in the wake of Trump’s tariffs, but Bessent has publicly defended Trump’s latest round of tariffs.
Commerce Secretary Howard Lutnick is also facing pushback for Trump’s tariff policy. Politico reports that as pushback to Liberation Day piles up, Lutnick is a potential fall guy for Trump and the White House.
On Friday, the Pentagon’s acting Inspector General announced an investigation into Defense Secretary Pete Hegseth’s use of the messaging app Signal. His use of an unsecured app could lead to his ouster, though he has remained secure in his role since The Atlantic broke the story.
Will the E.U. impose tariffs on the U.S. before May?
Price Highlights: Polymarket traders give the European Union an 81% chance of imposing tariffs on the United States, down from 94% on April 2.
Settlement Terms: The tariff only has to be enacted for the market to resolve to ‘Yes.’ If the tariff is enacted in April but goes into effect in May, the market will still resolve to ‘Yes.’
Analysis: In response to Liberation Day, the head of the E.U.’s executive arm said that “Europe is ready to respond” to the 20% tariffs Trump plans to impose on the E.U. While Europe is still planning to negotiate with the United States, the E.U. has its own domestic industries to protect. The E.U. has already prepared “countermeasures” for about $26 billion of U.S. goods in response to Trump’s steel and aluminum tariffs.
How much will the 2025 reconciliation bill increase the deficit?
Price Highlights: PredictIt traders give the reconciliation bill a 33% chance of increasing the deficit by at least $5.5 trillion and a 13% chance of increasing it by $2.5 to $3 trillion.
Settlement Terms: The final Congressional Budget Office (CBO) estimate of the reconciliation bill’s impact on the deficit over the next decade.
Analysis: PredictIt traders are grappling with two possible scenarios. One is a CBO analysis that showed the Senate would allow the House’s reconciliation bill to add $5.8 trillion to the deficit over the next decade.
The other is a CBO analysis that shows the House bill in its current form could add $2.8 trillion to $3.3 trillion to the deficit. The Senate approved the House bill over the weekend, so the form’s final version will come into increasing focus.
When will Elon Musk leave DOGE?
Price Highlights: Kalshi traders give Elon Musk an 87% chance of leaving DOGE by the end of 2025, up from 72% on April 1.
Settlement Terms: Musk leaving DOGE and DOGE being dismantled will both resolve the market to ‘Yes.’ DOGE’s restructuring or Musk moving to a comparable advisory role will not resolve the market to ‘Yes.’
Analysis: Musk is a Special Government Employee (SGE), so he’s expected to only work for the government up to 130 days during the year. However, DOGE’s indiscriminate budget cuts have led to a loss of support for Musk, which could accelerate his transition to a less public role.
Democratic candidates made large gains against their Republican opponents in Florida’s special elections, and the liberal state Supreme Court candidate overcame Musk’s $25 million campaign against her. While Musk was not the only factor in these races, he oversees one of the least popular initiatives in Washington and is currently a drag on Republican tickets.
