JPMorgan Chase & Co (NYSE:JPM, ETR:CMC) has raised its forecast for the probability of a US and global recession in 2025 to 60%, up from 40%, following the announcement of sweeping tariffs by US president Donald Trump.
On Wednesday, Trump introduced a 10% base tariff on almost all US imports, along with increased duties targeting dozens of other countries.
In a report titled “There Will Be Blood,” JPMorgan analysts warned that the tariffs are expected to cost US households approximately $700 billion, equating to a de facto tax hike of 2.4% of GDP.
"Disruptive US policies has been recognized as the biggest risk to the global outlook all year," they wrote.
"The effect of this tax hike is likely to be magnified through retaliation, a slide in US business sentiment, and supply chain disruptions.”
Financial markets have reacted sharply to the latest tariffs, with the S&P 500 experiencing its worst day since 2020 on Thursday.
The impact of the tariffs is expected to be “modestly dampened” by further interest rate cuts in the US later this year, JPMorgan believes.
The analysts repeated their forecast of two 25 basis point reductions from the Federal Reserve in June and September. According to LSEG data, investors expect four cuts.