As global markets reel under the impact of sweeping reciprocal tariffs announced by U.S. President Donald Trump, JPMorgan Chase has sharply raised its odds of a global recession to 60 percent for 2025, citing broad-based economic fallout. The firm’s Chief Economist, Bruce Kasman, cautioned that the tariffs represent the largest tax hike on U.S. households and businesses since 1968 and could result in a “substantial macroeconomic shock” if sustained.

In a starkly titled note to clients — “There Will Be Blood” — Kasman painted a grim picture of cascading consequences: deteriorating U.S. business sentiment, heightened geopolitical tension, retaliatory trade measures, and significant supply chain disruptions. These factors, the note argued, could amplify the direct financial impact of the tariffs and push not just the U.S. but the global economy into recession in the current calendar year.

Tariffs as a Tax Shock: JPMorgan Cites Largest Hike Since 1968

According to JPMorgan, the tariffs announced by the Trump administration constitute the largest direct tax increase on U.S. consumers and businesses in nearly six decades. While the levies are positioned as “reciprocal,” matching duties imposed by foreign countries, their broad scope — spanning over 60 nations — makes them economically consequential.

“The effect of this tax hike is likely to be magnified — through retaliation, a slide in U.S. business sentiment, and supply chain disruptions,” Kasman warned. The analysis suggests the cumulative impact would weaken consumer demand, hinder corporate profitability, and unsettle capital expenditure plans.

The bank’s previous projection placed the probability of a 2025 global recession at 40 percent. That figure has now been revised upward by 20 percentage points, following Trump’s abrupt announcement and subsequent remarks suggesting willingness to escalate further if trade partners do not offer “phenomenal” concessions.

Highlights:

JPMorgan raises 2025 global recession odds from 40% to 60%
Tariffs seen as largest U.S. tax hike on households/businesses since 1968
Economic risks include retaliation, demand slump, and logistical chaos
Consumer sentiment and business investments expected to deteriorate

Wall Street Begins Sounding the Alarm: Recession Now a ‘Base Case’ for Some

JPMorgan isn’t alone in its dire outlook. Several Wall Street research houses issued cautionary notes on Thursday, warning of heightened economic risks. Some firms have already made a U.S. recession their base-case scenario for late 2025, contingent on the continuation of the newly announced trade policy.

Although JPMorgan has not formally changed its GDP forecasts yet, the tone of its advisory suggests a heightened sensitivity to policy evolution. “We are not making immediate changes to our forecasts and want to see the initial implementation and negotiation process that takes hold,” Kasman noted. “However, we view the full implementation of announced policies as a substantial macroeconomic shock not currently incorporated in our forecasts.”

The Wall Street response comes after the S&P 500 plunged nearly 5 percent on Thursday — its worst single-day drop since the COVID-19 market crash in 2020. Tech-heavy indices like the Nasdaq 100 fell over 5.5 percent, as investor concerns mounted over profit margin erosion and overseas sales risks.

Highlights:

Several investment banks now see U.S. recession as base case
S&P 500 sees worst drop since 2020 pandemic-era crash
JPMorgan maintains forecasts temporarily, pending policy execution
Recession warnings likely to intensify if tariffs are fully enforced

Global Economic Fallout: Retaliation Risks and Investor Caution Escalate

Beyond the United States, the risk of spillover into other major economies remains high. China has already threatened “firm countermeasures,” and Canada responded with a 25 percent tariff on U.S. auto exports within hours of Trump’s announcement. Such retaliatory steps could initiate a cascading effect on global trade flows, investment patterns, and employment levels.

Kasman’s note specifically warns of ripple effects on global supply chains, many of which remain fragile post-pandemic. The return of restrictive tariffs could lead to a reconfiguration of production networks, higher input costs, and delays in the movement of goods — a trifecta that could stifle growth in emerging and developed markets alike.

With markets pricing in tighter margins and slower expansion, investor sentiment has shifted toward defensive assets and high-grade bonds. Central banks may be forced into a delicate balancing act — supporting growth without fueling inflation.

Highlights:

China, Canada already announce or threaten counter-tariffs
Global supply chains at risk of severe disruption
Recession threat now extends beyond U.S. borders
Investors rotating out of risk assets amid volatility surge

Trump Signals Potential for Concessions, But Market Unconvinced

In a brief media interaction aboard Air Force One, Trump signaled that he may scale back some tariffs if trading partners offer something “phenomenal,” though he gave no indication of ongoing diplomatic efforts. The ambiguity has done little to calm markets.

Economists remain skeptical of a near-term resolution, with many citing the lack of formal dialogue or roadmaps. JPMorgan and others now argue that even partial implementation of the current tariff package could have lasting effects on inflation, wage growth, and cross-border capital flows.

Until concrete negotiations are visible and global central banks provide synchronized responses, analysts expect volatility to dominate equity and currency markets.

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