The tariffs announced by President Trump as an “economic independence declaration” are expected to mark a new era in global trade, while raising concerns about inflationary pressures and slowing down economic growth in the US. So, what is a recession? What happens during a recession? A recession refers to a contraction in economic activities in a country. Technically, a recession is defined as two consecutive quarters of contraction in Gross Domestic Product (GDP). A situation where economic shrinkage becomes continuous and other economic activities lose vitality for a long time is recognized as a depression. Recessions can manifest in various ways. Global financial crises, political uncertainties, natural disasters, and weaknesses in economic activities create conditions for a recession. Central bank decisions and a country’s monetary policies can also trigger a recession. Tightening methods such as keeping monetary policy overly tight for an extended period or reducing the money supply can lead to negative growth in the economy over time. As economic activity slows down with a recession, the increase in unemployment rates due to contraction, reduction in consumer spending, decrease in demand, decrease in import, export, and trade volume, lack of investment, and decline in production can occur. A recession indicates a temporary contraction in economic activities. Prolonged effective recessions can exacerbate economic difficulties leading to social issues. Governments and central banks take policy measures to heat up the economy, stimulate it, and support coming out of a recession. These measures may include lowering interest rates, providing fiscal stimulus, and increasing public spending.