JPMorgan Forecasts U.S. Recession in 2025 Due to Tariffs

JPMorgan Chase has issued a stark warning, predicting that the United States will slip into a recession by the end of 2025, driven largely by President Trump’s aggressive tariff policies.

The bank’s chief economist, Michael Feroli, revised the GDP forecast to a contraction of 0.3%. This marks a dramatic shift from an earlier projection of 1.3% growth.

Analysts attribute the downturn to new tariffs imposed on over 180 countries, sparking fears of a trade war. Retaliatory measures, like China’s 37% tariff hike, are already in motion.

Wall Street has reacted sharply, with the S&P 500 losing $5.4 trillion in value over two days. The Nasdaq has also entered bear market territory, down over 20% from its peak.

Feroli predicts unemployment could climb to 5.3% as businesses face higher costs and reduced demand. This would reverse recent gains in job creation under Trump’s administration.

Inflation is expected to surge to 4.4% by year-end, complicating the Federal Reserve’s plans. Fed Chair Jerome Powell has hinted at potential rate cuts starting in June to counter the damage.

Other banks, including Barclays, have echoed JPMorgan’s grim outlook, forecasting a GDP decline. The consensus is that prolonged tariffs could cripple economic stability.

Senator Ted Cruz warned that permanent tariffs might lead to a Republican “bloodbath” in 2026 elections. He urged Trump to use them as leverage, not a fixed policy.

Global recession odds have risen to 60%, per JPMorgan, as supply chains falter under trade barriers. The bank’s report, titled “There Will Be Blood,” underscores the stakes.

Critics argue Trump’s focus on American manufacturing ignores the broader fallout. Supporters, however, see tariffs as a bold move to reclaim industrial dominance.

The White House defends the policy, claiming it will bolster national security through self-reliance. Trade adviser Peter Navarro has dismissed recession fears as overblown.

Markets remain volatile, with investors bracing for further shocks as tariff effects unfold. The coming months will test Trump’s economic gamble against expert warnings.