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Economic Recession
Analysts at JPMorgan Chase warned that the impact of President Donald Trump’s new set of tariffs could take the economy “perilously close to slipping into recession.”
The gloomy economic forecast was released hours after Trump rocked the global financial markets with his announcement of sweeping tariffs in a Rose Garden ceremony on Wednesday, which he dubbed “liberation day.”
But as financial markets tumbled in the wake of the tariffs targeting China and the European Union in particular, analysts at JPMorgan estimated hours after the announcement that the tariffs would amount to “the largest tax increase since the Revenue Act of 1968.”
“The somewhat confusing nature of today’s news, coupled with uncertainty over how long these tariffs will remain in place, should make for an even less friendly environment for investment spending,” the report said.
Raising Prices
Trump's announcement, the analysts noted, would raise just under $400 billion in revenue—or about 1.3% of GDP. It could also hike Personal Consumption Expenditure prices by up to 1.5% this year.
“The resulting hit to purchasing power could take real disposable personal income growth in 2Q-3Q into negative territory, and with it the risk that real consumer spending could also contract in those quarters. This impact alone could take the economy perilously close to slipping into recession. And this is before accounting for the additional hits to gross exports and to investment spending.”
Later in the report, the analysts warned that amid retaliatory measures expected in the coming days, the “somewhat confusing nature of today's news”—coupled with “uncertainty over how long these tariffs will remain”—should "make for an even less friendly environment for investment spending (though that is one way to narrow the saving—nvestment imbalance and hence narrow the current account deficit)."
The new financial outlook sent critics railing against the Trump policy. “This from JPMorgan is bad, bad, bad,” James Pethokoukis, a conservative policy analyst at the American Enterprise Institute, told his followers on X.
“Tough language from JPMorgan tonight,” wrote CNBC reporter Carl Quintanilla in a Bluesky post.
Democratic strategist Ian Sams highlighted to his X followers the JPMorgan analysts estimated the tariffs to be the “largest tax increase since 1968,” as did conservative never-Trump attorney George Conway. “As a percentage of GDP. In absolute terms, perhaps the largest tax increase in the history of the human race?” Conway wrote on X.
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“New JP Morgan Climate Risk report out and even they are calling the insurance/property crisis the ‘doom loop’ now,” Boston University law professor Madison Conway posted on Bluesky.
Justin Gundlach, a research scholar at Columbia Law School, added on Bluesky: “The fact that this particular crisis is being bumped out of the top 3 (maybe 5!) on my mental list of ‘big bad things that could be mitigated or avoided with swift, coordinated, prudent action’ is leaving me shook, Madison!”
