Moody’s Chief Economist Mark Zandi sees a 40% probability of the U.S. economy falling into a recession this year on the back of the Trump administration’s implementation of trading tariffs and government employment cuts.

The odds of a U.S. recession are rising ahead of Wednesday’s “Liberation Day,” when President Donald Trump plans to escalate a trade war that has shaken consumer confidence and rattled investors. Goldman Sachs lifted its forecast Sunday and now sees a 35% chance of a U.

Mark Zandi said the situation may not be as grave if countries do not respond “in kind” to the president’s tariffs.