JPMorgan : Trump’s Tariffs Would Lead To U.S. Recession, GDP Shrinks, Jobs at Risk
JPMorgan Chase & Co. has issued a stark warning that the United States is heading toward a recession this year, citing the economic impact of new tariffs introduced by former President Donald Trump. The bank’s assessment follows two days of market turmoil, with trillions wiped off the value of U.S. stocks.
In a note to investors released Friday, JPMorgan’s Chief U.S. Economist Michael Feroli projected that the country’s real GDP would contract by 0.3% in 2025, a steep downward revision from the earlier forecast of 1.3% growth. The note also predicted a surge in the unemployment rate, rising to 5.3% as economic activity slows.
“We now expect real GDP to contract under the weight of the tariffs,” Feroli said, as quoted by Bloomberg. “For the full year (Q4/Q4), we now look for real GDP growth of -0.3%.”
Trump’s new trade policy, announced on Wednesday, imposes a blanket 10% tariff on imports from all nations starting April 5. Countries with large trade deficits with the U.S. will face even higher tariffs from April 9. India, among the affected nations, will see a 26% tariff imposed on all its exports to the U.S.
The announcement rattled financial markets. The S&P 500 plunged to an 11-month low, erasing $5.4 trillion in market value over just two trading sessions. The Dow Jones also witnessed sharp declines, sparking recession fears.
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Other financial institutions have echoed JPMorgan’s concerns. Barclays Plc revised its U.S. growth forecast, projecting a contraction in GDP consistent with a recession. Citi slashed its 2025 growth estimate to just 0.1%, while UBS downgraded its forecast to 0.4%.
UBS Chief U.S. Economist Jonathan Pingle noted, “We expect U.S. imports from the rest of the world to fall more than 20% over our forecast horizon, bringing imports as a share of GDP back to pre-1986 levels. The forcefulness of the trade policy action implies substantial macroeconomic adjustment for a $30 trillion economy.”
Despite a likely increase in inflation—projected to rise to 4.4% by year-end—JPMorgan anticipates the Federal Reserve will begin cutting its benchmark interest rate starting in June. Rate cuts could continue at each Fed meeting through January 2026, bringing rates down from the current 4.25%-4.5% range to as low as 2.75%.
Federal Reserve Chair Jerome Powell also expressed concerns on Friday during a business journalism conference, warning that the new tariffs could derail current economic stability and complicate inflation control efforts.
“These developments could cause much greater and lasting economic damage than anticipated,” Powell said, suggesting that the Fed may be forced to take action sooner than expected.
With global supply chains already strained and international tensions over trade rising, the full impact of Trump’s tariff policy may unfold over the coming months. For now, economists warn that the U.S. economy is entering turbulent waters, with recession fears becoming increasingly hard to ignore.
