Catenaa, Friday, April 04, 2025- JPMorgan has increased the US recession risk to 60% after US President Donald Trump implemented the largest cumulative tax hike in 57 years on Wednesday.
In a research note to clients published on Thursday, JPMorgan warned that the risk of the global economy falling into a recession has increased from 40% to 60% in response to “Liberation Day” tariff announcement.
Trump on Wednesday announced sweeping 10% tariffs on goods from any country imported into the United States, and even higher tariffs for 60 trading partners with a persistent trade deficit with the US.
JPMorgan said President Trump’s cumulative tariff hikes amount to about 22%, which would be equivalent to the biggest US tax increase since 1968.
“Disruptive US policies has been recognized as the biggest risk to the global outlook all year,” JPMorgan’s research note reads. “The latest news reinforces our fears as US trade policy has turned decisively less business-friendly than we had anticipated.”
JPMorgan describes tariffs “at a basic level” as a functional tax increase on US household and business purchases of imported goods.
“A hike of this size would be on par with the largest tax hike since WWII,” the JPMorgan research note reads. Its effects could be magnified “through retaliation, a slide in US business sentiment, and supply chain disruptions.”
“We thus emphasize that these policies, if sustained, would likely push the US and possibly global economy into recession this year. An update of our probability scenario tree makes this point, raising the risk of a recession this year to 60%,” the note continues.
For now, though, the note indicates JPMorgan’s economists “view the full implementation of announced policies as a substantial macroeconomic shock” — one not easily recovered from, should Trump’s policies persist
