J.P. Morgan Says Trump’s Tariffs Could Trigger US Recession, Cause Inflation To Jump
Written by
Vance Cariaga
Edited by
Jenna Klaverweiden
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Sweeping tariffs proposed by President Donald Trump have already sent the stock markets on a wild ride of extreme ups and downs (mostly downs). Now some experts fear that fallout from the tariffs could send the United States into a recession — including key people at banking giant J.P. Morgan.
Here are more details on what J.P. Morgan expects for a recession this year.
Is a Recession Coming?
After Trump announced his global tariffs earlier this month, J.P. Morgan economists said the tariffs could cause prices of personal consumption expenditures to rise anywhere from 1% to 1.5% later this year, Barron’s reported.
Most of the inflationary impact is expected to be felt during the second and third quarters. If that happens, consumers’ purchasing power could take enough of a hit that real disposable income growth will turn negative, according to J.P. Morgan.
“This impact alone could take the economy perilously close to slipping into recession,” the bank noted. “And this is before accounting for the additional hits to gross exports and to investment spending.”
What Impact Do Tariffs Have?
J.P. Morgan initially said there was a 60% chance of a recession due to the tariffs, Newsweek reported. The bank maintained that forecast even after Trump announced a 90-day pause on most U.S. reciprocal tariffs.
In a report, J.P. Morgan specifically cited extraordinarily high tariffs on Chinese goods.
“More shocking is the increase in China tariffs to an astounding 125%,” the report said. “A simple calculation of 10% on all countries except China at 125% gives an average U.S. tariff rate of roughly 25% — a touch higher than the rate at the end of [the previous] week.”
In response, China said it will impose an 84% tariff on all U.S. goods, which is a 50-percentage-point increase from where it was prior, CNBC reported.
Who Else Is Forecasting a Recession?
J.P. Morgan economists aren’t the only ones at the bank to warn of a possible recession. CEO Jamie Dimon did as well in a recent appearance on Fox Business.
“I think probably [a recession is] a likely outcome,” Dimon said. “Markets aren’t always right, but sometimes they are right. And I think this time they are right because they’re just pricing uncertainty at the macro level and uncertainty at the micro level, at the actual company level, and then how it affects consumer sentiment. It’s hard to tell.”
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