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By Barney Henderson
Content Director
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JPMorgan Chase CEO Jamie Dimon has issued a stark warning about the potential fallout from escalating trade tensions, cautioning that a global trade war could push the U.S. economy into recession, fuel inflation, and strain key international alliances.
In his closely watched annual letter to shareholders, published Monday, Dimon pointed to new tariffs announced last week by President Donald Trump as a source of economic risk. He said the measures "will likely increase inflation and are causing many to consider a greater probability of a recession."
Why It Matters
Last Wednesday, Trump announced a minimum tariff of 10% on imports, with the tax rate running much higher on products from certain countries like China and those from the European Union.
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The move has led to markets tanking around the world. On Monday, the Hong Kong stock market fell by a record 13.2%.
What to Know
Dimon urged swift resolution to the brewing trade conflict, warning that the longer it drags on, the more damage it could do. "The quicker this issue is resolved, the better, because some of the negative effects increase cumulatively over time and would be hard to reverse," he wrote.
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While he expressed hope that negotiations could eventually yield some benefits for the U.S., Dimon underscored the uncertainty surrounding the tariffs—including potential retaliatory actions by foreign governments, reduced business confidence, and disruptions to investment and capital flows.
"My most serious concern," Dimon added, "is how this will affect America's long-term economic alliances."
"America First is fine, as long as it doesn't end up being America alone," Dimon said. "If the Western world's military and economic alliances were to fragment, America itself would inevitably weaken over time," he said.
Last Thursday, in the wake of the tariff announcement, JP Morgan increased the chances of a U.S. recession this year from 40 percent to 60 percent.
On Monday, Goldman Sachs raised the odds of a U.S. recession to 45 percent from 35 percent.
What People Are Saying
Jamie Dimon added that the U.S. economy was resilient despite the "unsettling landscape": "Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth."
JPMorgan's chief economist Bruce Kasman wrote in a research note to clients published on Thursday: "Disruptive U.S. policies have been recognized as the biggest risk to the global outlook all year."
"We thus emphasize that these policies, if sustained, would likely push the U.S. 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%."
Donald Trump wrote on his Truth Social platform on Monday morning: "Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION, and the long time abused USA is bringing in Billions of Dollars a week from the abusing countries on Tariffs that are already in place. This is despite the fact that the biggest abuser of them all, China, whose markets are crashing, just raised its Tariffs by 34%, on top of its long term ridiculously high Tariffs (Plus!), not acknowledging my warning for abusing countries not to retaliate. They've made enough, for decades, taking advantage of the Good OL' USA! Our past "leaders" are to blame for allowing this, and so much else, to happen to our Country. MAKE AMERICA GREAT AGAIN!"
What Happens Next
Wall Street is expected to follow Asia and Europe with sharp drops on Monday, as markets realize tariffs could well be here to stay.
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