Financial giant J.P. Morgan has issued a stark warning: the US economy could slip into a recession this year, driven by President Donald Trump’s newly announced tariffs. In a note to investors last Friday, J.P. Morgan’s chief US economist, Michael Feroli, explained that these tariffs could drag down the nation’s gross domestic product (GDP). The Hill reports that Feroli also predicts a rise in unemployment, with the jobless rate potentially hitting 5.3% as a result of this economic slump.
The forecast follows Trump’s April 2 announcement of reciprocal tariffs targeting multiple countries to address trade imbalances. Starting today, April 5, a 10% tariff applies to all imports, while steeper levies kick in on April 9 for nations with significant trade surpluses with the US, including India, which faces a 26% tariff on its exports.
Also read: Indian Markets Slide as US Reciprocal Tariffs Loom: Impact on Investors
Federal Reserve Chair Jerome Powell has also raised red flags. Speaking at a business journalism conference last Friday, he cautioned that the tariffs could inflict greater harm than anticipated, driving up inflation and slowing growth. Powell noted that this could complicate the Federal Reserve’s efforts to keep prices in check, adding a layer of uncertainty to the economic outlook.
Also read: Trump Races Against Tariff Deadline in Talks with India, Vietnam, Israel: Report
Yet, not all views are bleak for India. Global brokerage firm Jefferies suggests that India’s major export sectors—IT services, pharmaceuticals, and automobiles—may escape direct damage from the tariffs. The firm calls the 26% tariff on Indian goods “reasonable” compared to rates imposed on other nations. Still, Jefferies warns that a faltering US economy could indirectly dent demand for Indian exports, particularly in the IT sector.