WASHINGTON, D.C. — The U.S. economy could be headed toward a recession and there is a 24% chance that it was already in recession in Oct. 2025, according to an analysis by the Federal Reserve Bank of Cleveland, though the bank warned its calculation has become less reliable in recent years.

The assessment is based on an October survey in which businesses reported that uncertainty about President Donald Trump’s sweeping tariff regime has increased their costs and forced them to raise prices.

“We have heard from many of our contacts about tariffs dampening demand or raising their input costs,” said Lisa Barrow, vice president of the bank’s research department.

Trump last Friday rolled back tariffs for some South American countries for more than 200 grocery products, such as coffee and beef. The rollbacks mark a sharp reversal of the president’s signature economic policy and an acknowledgment of consumers’ rising anxiety over prices, even though Trump and his officials have insisted the tariffs have not contributed to inflation.

While Trump campaigned on lowering grocery prices, food prices have risen 3.1% in the last year ending in September—slightly above overall inflation of 3.0%, according to the Consumer Price Index. Certain product costs spiked, such as coffee rising 18.9%.

Some motivation for the tariff rollback also lay in electoral concerns, as worries over affordability helped propel Democrats to win several elections across the country earlier this month.

“The Trump administration is reversing course because prices are high and tariffs have an inflationary effect and push prices higher,” said University of Akron political science professor Dave Cohen. “I think it's a little too little too late at this point, because right now it looks like the economy is starting to slow down.”

Further complicating matters, the Supreme Court will rule in the coming months on whether Trump has the authority to issue tariffs under the International Emergency Economic Powers Act (IEEPA), which could lead to an overturning of the tariffs and a refund of the $89 billion collected through the new tariffs, according to U.S. Customs and Border Patrol data.