JPMorgan Warns: Trump’s Tariffs Could Trigger a Recession, and It May Be Too Late to Avoid It

JPMorgan: Trump’s Tariffs May Trigger Recession

JPMorgan Chase has issued a serious warning: the U.S. is now on a fast track toward a recession, and even if President Trump’s new tariffs were rolled back immediately, it might not be enough to prevent it.

Bruce Kasman, JPMorgan’s chief economist, raised the firm’s recession risk forecast from 40% to 60% on Thursday. The sharp increase came after the White House announced a blanket 10% tariff on all imported goods — plus even higher rates for countries with large trade surpluses with the U.S.

These sudden changes shook the stock market, disrupted business operations, and left economists deeply concerned about a coming economic downturn.

“Is there still a way to fix this?” Kasman asked on JPMorgan’s weekly podcast The Weekender. “It’s hard for me to imagine a situation where we reverse course and feel confident enough to take back our recession warning in just two weeks.”

In a research note titled “There Will Be Blood,” JPMorgan economists compared Trump’s tariff move to a massive tax hike — the largest since 1968 under President Lyndon B. Johnson. They warned that the impact would be amplified by likely retaliation from other countries, falling business confidence, and serious supply chain disruptions.

“If these policies stay in place, the U.S. — and possibly the global economy — will likely fall into a recession this year,” the report stated. Even if quick negotiations follow, the long-term damage to business confidence and global trade could be hard to undo.

Stock Markets Hit Hard

Markets reacted quickly. On Thursday, the S&P 500 fell nearly 6%, and dropped another 4% Friday — its worst two-day decline since June 2020. The Dow Jones dropped over 2,200 points, and the Nasdaq fell nearly 6%, plunging more than 20% below its all-time high.

Massive Shift in Trade Policy

President Trump’s tariffs mark a total shift in U.S. trade policy. A flat 10% tariff now applies to all imports, with even higher rates on key trade partners: China (34%), Japan (24%), the EU (20%), and Vietnam (46%). The administration claims these rates are based on each country’s trade imbalance with the U.S., but economists argue the numbers are arbitrary and dangerous.

“These tariffs will protect American workers, rebuild our factories, and put America First,” Trump said during a televised speech. On social media Friday, he mentioned a call with Vietnam’s President To Lam about possibly lowering their 46% tariff rate.

But economists warn these actions could have serious side effects — raising prices for everyday goods, hurting exports, and breaking global supply chains.

Warning Signs Everywhere

Kasman was blunt: “The idea that this is a business-friendly administration — that’s broken.” JPMorgan estimates that this year’s tariff hikes amount to a 22 percentage point increase in effective taxes — the biggest jump since the 1960s.

According to IMF models, a prolonged trade war could shrink U.S. GDP by 2 percentage points and reduce global economic output by 1 point.

Already, businesses and families are feeling the pinch. Car manufacturers expect vehicle prices to rise 11–12%. Retailers say products like cereal, clothes, and other essentials will also get more expensive.

Kasman added that there’s a psychological toll too. The lack of predictability is damaging business confidence. “We’ve lost that sense of stability and clear rules,” he said.

Another JPMorgan economist, Joseph Lupton, agreed. “Even if tariffs are lowered slightly, we’re still imposing big trade penalties,” he said.

As a result, companies are pulling back. Many are delaying or canceling investments and expansion plans. The Federal Reserve, which had paused interest rate hikes, may now need to cut rates — not to spark growth, but simply to soften the blow of a downturn.

While JPMorgan hasn’t officially revised its GDP forecast yet, the tone is clear: their economists believe this is the darkest economic outlook since the early days of the pandemic.

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