By Mackenzie Tatananni
JPMorgan believes a recession is more likely to happen than not following President Donald Trump's latest barrage of tariffs against U.S. trading partners.
The firm's economics team boosted its recession risk forecast to 60% from 40% following Trump's "Liberation Day" announcement, which saw the U.S. president impose sweeping tariffs of at least 10% on all countries, and higher-than-expected "reciprocal" tariffs on certain U.S. trade partners.
The levy hike poses "the largest tax increase" since the Revenue Act of 1968, which temporarily instituted a 10% income tax surcharge to fund the Vietnam War, JPMorgan said. The firm anticipates that the measure could boost prices by 1% to 1.5% this year, with inflationary effects materializing in the middle quarters of 2025.
The team believes the impact will be amplified through retaliatory tariffs, supply chain disruptions, and a decrease in business sentiment domestically. While tariff hikes allow flexibility for fiscal policy easing, this will only slightly soften the blow, JPMorgan said.
China announced Friday it would impose additional tariffs of 34% on all U.S. imported goods beginning April 10.
JPMorgan's researchers predicted that U.S. gross domestic product will slide by about 2 percentage points, while global GDP will decrease by 1 point.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 04, 2025 07:46 ET (11:46 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Comments