There Will Be Blood, Warns JPMorgan Chief Economist As Trump Tariffs Stoke Fears Of Global Recession, Wall Street Falls

Wall Street is bracing for economic fallout following former President Donald Trump’s sweeping tariff proposals, with top financial institutions sharply raising their recession forecasts. According to a Bloomberg report published April 2, JPMorgan Chase now sees a 60 per cent chance of a global recession in 2025, up from its previous estimate of 40 per cent.

“The effect of this tax hike is likely to be magnified, through retaliation, a slide in US business sentiment, and supply chain disruptions,” wrote Bruce Kasman, Chief Economist at JPMorgan, in a research note titled There Will Be Blood.

Goldman Sachs has raised its U.S. recession odds from 20 per cent to 35 per cent for the coming year, citing a “sharp deterioration in household and business confidence.” The investment bank also cut its 2025 GDP forecast to 1 per cent and predicted that unemployment could rise to 4.5 per cent, as per a report by Bloomberg.

Market Turmoil and Declining Confidence

The stock market has responded with volatility. The S&P 500 posted its steepest daily loss since the COVID-19 pandemic, while consumer sentiment has dropped to its lowest point in years. The University of Michigan’s latest survey shows the highest share of Americans expecting job losses since the 2008 financial crisis.

“While sentiment has been a poor predictor over activity in recent years, we are less dismissive of the recent decline because economic fundamentals are not as strong as in prior years,” Goldman Sachs added, as quoted by Bloomberg.

Moody’s Analytics also revised its outlook. Chief Economist Mark Zandi increased his U.S. recession forecast to 40 per cent, up from 15 per cent, attributing the change to the combination of new trade restrictions and anticipated federal spending cuts. “The intensifying trade war and government spending cuts are behind this,” he posted on X (formerly Twitter).

Trump Holds Course Despite Warnings

Speaking aboard Air Force One, Trump defended the scope of the tariffs. “You’d start with all countries, so let’s see what happens,” he said, pushing back against the idea that the measures would be narrowly targeted.

The White House estimates the tariffs could yield up to $600 billion annually, though that figure has been met with skepticism. Economists warn the real cost will fall on consumers and businesses, not foreign governments.

Peter Navarro, a senior trade adviser during Trump’s presidency, argued the policy is necessary for restoring American manufacturing. “America cannot just be an assembler of foreign-made parts—we must become a manufacturing powerhouse that dominates every step of the supply chain of industries that are critical for our national security and economic interests,” Navarro said in a statement, as quoted by Bloomberg report.

Rising Inflation and Policy Response

Goldman Sachs now expects core inflation to reach 3.5 per cent by the end of 2025, up from a previous projection of 3 per cent. With tariffs likely to raise prices across several categories, real household incomes are expected to shrink. “Higher tariffs are likely to boost consumer crises,” Goldman warned, as per the report.

The Federal Reserve is anticipated to cut interest rates three times this year in response to mounting economic pressure. However, analysts are divided on whether monetary easing can neutralize the broader impact of protectionist trade policies, the report added.

Goldman also updated its estimates for retaliatory tariffs, predicting U.S. trading partners could raise duties by an average of 15 per cent. Some exemptions may apply, but the overall global trade environment is set to become more restrictive.

Mark Hamrick, Senior Economic Analyst at Bankrate, offered a grim outlook: “Between trade war escalations, economic uncertainty, and rising inflation, the risks to the economy are growing. This includes the possibility of a recession in the U.S. in the coming 12 months," as quoted by Bloomberg.