JP Morgan has warned that President Donald Trump’s sweeping new tariffs could push the U.S. economy into recession, as 10% levies on imports from nearly all countries took effect.
In response, the investment bank has reduced its U.S. growth forecasts, cutting its outlook by 1.6 percentage points and projecting a significant rise in unemployment rates.
Michael Feroli, JP Morgan’s chief U.S. economist, stated: “We now expect real GDP to contract under the weight of the tariffs. For the full year, we are forecasting real growth of -0.3%, down from our previous estimate of 1.3%.”
The warning follows China’s decision on Friday to retaliate with 34% tariffs on all U.S. imports—bringing the global economy closer to a full-scale trade war.
Markets responded with alarm as Trump insisted his trade stance would “never change,” sparking a deeper sell-off that has erased more than $5 trillion from U.S. stock values in just days.
Feroli predicts the U.S. economy will fall into recession during the second half of the year, marking a sharp reversal from a period of strong growth that had outpaced other developed nations.
JP Morgan also cautioned that the financial strain on American households—due to higher import costs—could prove even more painful than the inflation spike seen after the pandemic.
The bank expects unemployment to climb by over a full percentage point, reaching 5.3%.
The initial 10% tariffs took effect just after midnight, with further increases—up to 50% on some countries—scheduled to begin on April 9.
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