JPMorgan Reportedly Says Sustained Tariffs Could Lead To Recession Worldwide — Markets Tumble, Retail Sentiment Sours
According to TheFly, JPMorgan stated that the hefty 20% tariff imposed on the European Union "represents the most significant incremental shock to the global outlook."
Benchmark U.S. indices are headed toward a significant decline on Thursday after President Donald Trump announced sweeping tariffs, sparking fears of a trade war.
After the administration revealed the massive and broad-based tariffs, JPMorgan believes sustained tariffs could lead to a recession worldwide.
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In a press conference from the White House Rose Garden, Trump reportedly said that his administration will charge the countries approximately half of “what they are and have been charging us.”
“So, the tariffs will be not a full reciprocal,” he said per a CNBC report.
According to TheFly, JPMorgan global economist Nora Szentivanyi noted that beginning April 5, there will be a minimum 10% tariff on all goods imports coming into the U.S., but effective tariff rates would rise more sharply on April 9 against a broad set of the country's trading partners.
JPMorgan stated that the 20% tariff imposed on the European Union "represents the most significant incremental shock to the global outlook."
The firm noted that if implemented, the effective U.S. tariff rate will likely approach a 25% rate.
JPMorgan sees the full implementation of these policies as a "substantial macroeconomic shock." It noted that these policies, if sustained, would likely push the U.S. and global economies into recession this year.
Meanwhile, futures on benchmark indices lost over 2.5% on Thursday morning as investors panicked and heavily sold growth shares.
The SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust, Series 1 (QQQ) traded over 3% lower in Thursday’s pre-market.
Retail sentiment surrounding these ETFs inched lower compared to Wednesday.
An ongoing Stocktwits poll indicated that 42% of the respondents are bearish on the market following the latest tariff announcement. Thirty-two percent, however, said they would be buying the dip. About a quarter of the respondents believe in waiting on the sidelines as the announcement's impact plays out.
The fears of a recession come as the Federal Reserve still tackles sticky inflation. Investors will watch Fed commentary keenly to get further hints on how the monetary policy could pan out in the coming months.
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