Cliff Asness Slams Tariff Logic: 'Idiots Bray Like They've Scored A Point:' Warns Recession-Driven Deflation Isn't A Feature

Cliff Asness, Chief Investment Officer at AQR Capital Management, criticized proponents of tariffs Thursday, challenging claims that tariffs lead to deflation rather than inflation.

What Happened: “Idiots say this and bray like they’ve scored a great point,” Asness wrote on X. “What they mean is giant arbitrary tariffs are so bad they eventually cause recessions which then cause deflation. They then present this as a feature.”

His comments came in response to Anthony Pompliano, Founder & CEO of Professional Capital Management and Bitcoin BTC/USD bull, who had said, “Tariffs don’t create inflation. The exact opposite happens.”

The exchange occurs as JPMorgan Chase & Co. recently raised its U.S. recession probability to 40% from 30%, citing President Donald Trump‘s trade policies as a key factor. According to JPMorgan’s chief global economist Bruce Kasman, upcoming trade measures would lift effective U.S. tariff rates above 10%, potentially cutting 0.5 percentage points from both global and U.S. GDP in 2025.

Kasman identified three key risks: eroding investor confidence, disruptions to supply chains, and constraints on the Federal Reserve’s ability to counteract damage through monetary easing. “The combination of higher inflation and weaker employment growth creates a dilemma for the Fed,” noted Michael Feroli, JPMorgan’s chief U.S. economist.

Why It Matters: Cryptocurrency betting markets reflect growing concerns, with Polymarket showing the odds of a 2025 recession jumping from 46% to 54% in just 24 hours following Trump’s “Liberation Day” tariff announcement. Over $1 million has been wagered on this outcome.

Not all experts share the pessimistic outlook. Ark Funds CEO Cathie Wood continues to forecast a “deflationary boom” for the second half of 2025, arguing that the market is pricing in “the last leg of a rolling recession.”

Meanwhile, veteran strategist Ed Yardeni has reduced his odds for his bullish “Roaring 2020s” scenario from 65% to 55%, raising stagflation probability to 45% amid concerns that tariffs will squeeze corporate profit margins and push inflation higher.

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