Recession Risk Jumps to 60% as Trump’s Tariffs Shake Global Economy, Says J.P. Morgan

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J.P. Morgan has raised the likelihood of a U.S. and global recession this year to 60%, up from 40%, following President Donald Trump's implementation of extensive reciprocal tariffs. 

On Wednesday, Trump imposed a 10% baseline tariff on all imports to the U.S., along with higher duties on several other countries. J.P. Morgan strategists, led by Bruce Kasman, noted that disruptive U.S. policies have been recognized as the biggest risk to the global economic outlook throughout the year. They also highlighted that U.S. trade policy has turned less business-friendly than initially expected.

Kasman explained that the impact of these tariff hikes could be amplified by retaliation, a decline in U.S. business sentiment, and disruptions in supply chains. Other major Wall Street firms, including Barclays and Deutsche Bank, have also expressed concerns about the heightened risk of a U.S. recession if these tariffs remain.

However, Kasman anticipates that the shock from the tariffs will be somewhat mitigated by the expectation of further interest rate cuts in the U.S. J.P. Morgan maintained its forecast for two 25-basis point rate reductions by the Federal Reserve in June and September, while investors expect a total of four rate cuts in 2025, according to data from LSEG.

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