Wall Street giant JP Morgan has said the risk of a global recession has shot up to 60% in the wake of US President Donald Trump’s announcement of wide-ranging reciprocal tariffs against some of the world’s biggest economies. On Wednesday, Trump unveiled tariffs targeting almost every country on earth, as well as additional tariffs on those countries accused by the US of having taxes on American goods, as per Al Jazeera.
They included a 34% levy on goods from China on top of an earlier 20% tariff, as well as a 20% tariff on the European Union, 24% on Japan and 25% on South Korea, AP reports. China announced on Friday that it will impose a 34% tariff on imports of all US products beginning April 10 in response, with the FTSE 100 plunging just minutes after the move was announced by Beijing.
US stocks slumped on Friday, with the Dow Jones Industrial Average dropping by around 2.2%, The S&P 500 by 2.5%, and the Nasdaq Composite plunging by 2.6%, as per Yahoo Finance.
Trump has described the import taxes, ranging from 10% to 49%, as a way to reverse unfair treatment by American trading partners and draw factories and jobs back home.
But investment brokerage JP Morgan now says the chances of the US and global economies sinking into a recession are now at 60%, up from an earlier estimate of 40%, with the damage likely to exacerbated by retaliation from governments around the world.
In an ominous note to clients on Thursday, entitled, “There Will Be Blood”, chief economist Bruce Kasman and his team offered a dire assessment of the tariffs’ impact, writing: “The effect of this tax hike is likely to be magnified — through retaliation, a slide in US business sentiment, and supply chain disruptions.
“The shock is likely to be only modestly dampened by the flexibility tariff hikes afford for further fiscal policy easing,” they added.
Though uncertainty surrounds whether the tariffs will end up being imposed as announced, Kasman and his team said it views the “full implementation of announced policies as a substantial macroeconomic shock not currently incorporated in our forecasts”.
“We thus emphasize that these policies, if sustained, would likely push the U.S. and possibly global economy into recession this year,” they added.
But despite hopes that the tariffs could be rowed back in light of the market turmoul, Trump doubled down on Friday, insisting in an all-caps post on his Truth Social platform that his policies will “never change”.
He wrote: “TO THE MANY INVESTORS COMING INTO THE UNITED STATES AND INVESTING MASSIVE AMOUNTS OF MONEY, MY POLICIES WILL NEVER CHANGE. THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!!!”
