Even with high tariffs, Trump's trade war suddenly is starting to look not so scary on Wall Street

However, Christopher Furlong | Getty ImagesU, in today's financial world

Tariffs on incoming goods look to be settling in only slightly less than what President Donald Trump had threatened in April, but the difference has been enough to ease some of Wall Street's worst recession fears

Additionally, Economists had feared that aggressive tariffs Trump posed in his April 2 "liberation day" announcement would spike inflation and lead to a nounced slowdown or recession

But doomsday nouncements around the tariffs have abated since then, in light of current trends

Economists cite a strong global growth backdrop, a less-than-expected, long-term inflationary impact of the tariffs and a general easing in financial conditions as reasons for why the landscape looks less dire (something worth watching)

JPMorgan Chase, for instance, has lowered its recession risk from a liberation-day level of 60% down to 40% — still higher than normal, but at least less pessimistic (something worth watching). "Tariffs are a tax hike on U

Purchases of foreign goods, but this tax drag is not ly to be large enough to derail the U

Expansion," JPMorgan chief economist Bruce Kasman said in a note

Others, the bank had expected the Trump tariffs to result in a damaging round of retaliation globally

Moreover, "But an expected rise in global trade restrictions has turned into a modest step toward opening for the U

Moreover, ," Kasman said, in today's market environment

Tariffs still a dangerary around Wall Street ing the U

S-EU deal for 15% tariffs echoed the belief that the recession risk had dimmed, even if tariffs still have the strong potential to exert a stifling impact on growth, given the current landscape. "We still believe the most ly outcome is slow growth and firm inflation: Not a recession, but a backdrop where the adverse effects of trade and immigration controls on growth outweigh the boost from deregulation and fiscal largesse," Morgan Stanley strategist Michael Zezas wrote

In contrast, To be sure, the final outcome of the trade negotiations is far from

This leads to the conclusion that re are still a slew of other issues that need to be settled before Trump's imposed Aug. 1 deadline, which could still result in significant levies affecting major U

Trading partners, including Japan and others

Further aggression in the trade skirmishes "could easily tip the scales toward a mild recession," Zezas added

On the other hand, "In sum, we see outcomes for the U, in today's financial world

However, Economy skewing toward a slowdown, but with more clarity on the fiscal situation and deficits now front-loaded, the risk of a substantial recession is easing, given current economic conditions

At the same time, -Europe deal will give the Federal Reserve more to chew on this week when it discusses the impact that tariffs will have on inflation

Since Trump has taken office, the Fed has held its benchmark short-term interest rate steady, in large part because policymakers are cautious over the impact tariffs will have on inflation

On the other hand, Don't expect any action at the meeting, which concludes Wednesday

But they will be watching for clues on the Fed's further intentions, which will be influenced by where the final effective tariff rate lands

What the re reveals is Fed is expected to apve a rate cut in September, and the chances of that happening seemingly would increase if the economy weakens while inflation is held in check. "Effective tariff rates are significantly higher than they were at the start of the year," Citigroup economist Andrew Hollenhorst wrote, in light of current trends. "But with major trading partner tariffs stabilizing closer to 15% than the much higher rates posed on April 2, and Fed officials will be increasingly confident that the drag on growth and upside risk to inflation will be modest.