JPMorgan Chase CEO Jamie Dimon cautions that President Donald Trump’s tariffs will likely drive prices higher and increase the risk of a recession in the United States.
The tariffs will not only fuel inflation but also exert additional pressure on an economy showing signs of slowing down, Dimon warns in his annual letter to shareholders.
“While there may be legitimate reasons behind the tariffs, they are expected to produce significant short-term effects, including inflationary outcomes on both imported and domestic goods.
“The range of tariffs may lead to a recession, although the outcome remains uncertain, but it will undoubtedly slow economic growth,” he emphasized.
Dimon praises the US as an exceptional nation that has maintained global security through extraordinary efforts, including trade, and advises recalibrating its strategic approach to address current challenges.
However, he issued a warning that any retreat from global leadership would create a vacuum that could be filled by China or other actors seeking to impose alternative international rules and norms.
Dimon emphasizes the need for the US to work alongside its allies to negotiate a relationship with China, whether viewed as a competitor or potential adversary.
“Whether one views China as a competitor or a potential adversary, it is imperative that we work alongside our allies to firmly negotiate an ongoing relationship,” Demons adviced.
JPMorgan’s economists project a 1% contraction in the US economy in the third quarter of 2025, followed by a 0.5% decline in the final quarter, potentially pushing the unemployment rate to 5.3%.
The bank’s forecast is based on the cumulative weight of tariffs, which will increase consumer prices, depress household spending, and weigh heavily on business investment.