JPMorgan predicts a 60% likelihood of a global recession following the implementation of Donald Trump’s tariffs

Introduction

On April 3, 2025, financial giant JPMorgan raised alarms about the global economy, increasing its forecast for a global recession by the end of the year from 40% to 60%. This revision comes in direct response to U.S. President Donald Trump’s announcement of new tariffs, set to impose a minimum 10% duty on most goods imported into the United States starting April 12, 2025. According to JPMorgan, these "disruptive U.S. policies" represent the most significant threat to the global financial outlook in 2025. This article delves into the details of Trump’s tariff policy, JPMorgan’s analysis, the potential economic fallout, and the broader implications for global markets.

Trump’s Tariff Announcement

On April 2, 2025, President Donald Trump unveiled a sweeping trade policy shift, declaring a 10% tariff on virtually all imported goods entering the U.S. The move, effective from Saturday, April 12, aims to bolster domestic industries and address trade imbalances—a hallmark of Trump’s economic agenda. However, this decision has reignited debates about protectionism and its consequences, echoing his earlier tariff initiatives during his first term. Unlike targeted measures against specific countries like China, this broad-spectrum tariff applies universally, amplifying its potential impact on global supply chains and trade dynamics.

JPMorgan’s Recession Forecast

JPMorgan’s updated recession probability, detailed in a research note titled “There Will Be Blood,” reflects a stark reassessment of economic risks. The firm cites several factors driving this 20% jump in likelihood:

• Tariff Retaliation: Other nations, notably China, have already signaled retaliatory measures. On April 3, China imposed an additional 34% tax on certain U.S. goods, a move analysts see as the opening salvo in a potential trade war.

• Supply Chain Disruptions: The tariffs threaten to upend global supply chains, increasing costs for businesses reliant on imported materials and components.

• Declining Business Sentiment: U.S. companies, facing higher input costs and uncertainty, may scale back investment and hiring, further dampening economic momentum.

JPMorgan’s economists likely employed advanced modeling—such as probability scenario trees incorporating yield curve spreads, debt ratios, and market sentiment—to arrive at this figure. The firm’s warning aligns with similar projections from peers like Barclays, which on April 3 forecasted a U.S. GDP contraction in 2025, signaling a domestic recession.

Economic Implications

The ripple effects of Trump’s tariffs could be profound:

• Global Trade Slowdown: A 10% tariff hike increases the cost of goods worldwide, potentially reducing demand and slowing international trade volumes.

• Inflationary Pressure: Higher import costs may drive up consumer prices in the U.S., challenging the Federal Reserve’s efforts to manage inflation.

• Market Volatility: Financial markets, already forward-looking, have shown unease. Posts on X from April 4-5 highlight growing investor concerns, with some linking tariff news to declining market confidence.

• Escalating Tensions: Retaliatory tariffs from trading partners could escalate into a broader trade conflict, magnifying economic damage.

JPMorgan warns that these factors, combined with existing global uncertainties—such as geopolitical tensions and post-pandemic recovery challenges—create a perfect storm for a recession.

Broader Context and Criticism

Trump’s tariff policy has drawn mixed reactions. Supporters argue it protects American jobs and counters unfair trade practices, a narrative resonant with his base. Critics, however, point to historical precedents: tariffs in 2018-2019 raised costs for U.S. consumers and manufacturers without significantly reshaping trade deficits. Posts on X reflect this divide, with some users decrying the policy as reckless, while others dismiss recession fears as overblown.

Other financial institutions echo JPMorgan’s caution. Barclays’ GDP contraction forecast suggests a consensus among analysts that the tariffs could tip fragile economies into decline. Yet, the exact outcome remains uncertain—economic models, while sophisticated, cannot fully predict human behavior or unforeseen policy shifts.

Conclusion

JPMorgan’s raised odds of a 60% global recession underscore the high stakes of Trump’s tariff gamble. As the April 12 implementation date nears, the world watches closely. Will this policy strengthen U.S. economic sovereignty, or will it trigger a cascading downturn? For now, the financial community braces for impact, with JPMorgan’s ominous “There Will Be Blood” title serving as a stark reminder of the risks ahead. Businesses, policymakers, and consumers alike must navigate this turbulent landscape, where the line between protectionism and peril grows ever thinner.