Will Donald Trump Tariffs Push US Into Recession? JP Morgan, Goldman Sachs, S&P Global Hint At Gloomy Outlook

United States President Donald Trump imposed reciprocal tariffs on dozens of countries, which were as high as 47% for some nations. If the Trump administration continues its disruptive policies, then the US economy can slip into recession, warned brokerage firms including JP Morgan, Goldman Sachs and S&P Global.

Donald Trump targeted more than 180 countries in his tariff announcement on April 2, which he labelled as 'Liberation Day'. China, Vietnam, Thailand, and Cambodia were among the worst hit nations because of Trump's tariffs announcement. Within a day, China retaliated to Trump announcement and slapped US with 37% additional tariffs. Several global brokerage firms have hinted that if America continues with its tariffs policy then it could trigger a recession like situation in the country and the world.

JP Morgan Chase On US Recession

JP Morgan Chase, on Thursday, raised possibility of US and global recession to 60% from 40%, reported Reuters. The recent update has come in the wake of Trump tariff distress threatening to shatter business confidence and global economic slowdown. China's retaliatory tariffs have further escalated the situation sparking the fears of trade war.

Highlighting the massive shift in US policies leading to an unfavourable environment for business growth, JP Morgan mentioned that the "Disruptive U.S. policies have been recognized as the biggest risk to the global outlook all year."

S&P Global Raises US Recession Probability

S&P Global revised the 'subjective probability' of a US recession and raised the possibility of a recession between 30 and 35%. In March, the possibility of an economic slowdown was 25%.

The gloomy outlook about US recession and global economic slowdown will become stronger with retaliatory tariff measures announced by other countries, noted experts. China has already initiated the 'tariff retaliation' reaction chain by imposing a blanket 34% additional tariffs on all goods imported from US.

Apart from S&P Global and JP Morgan, several other top global brokerage firms have also hinted at US recession and economic slowdown. Goldman Sachs upgraded its stance on the issue even before Trump's tariffs announcement on April 2 and raised the probability of a US recession to 35% from 20%. HSBC has indicated towards heightened chances of recession by the end of the year.

Higher Inflation, Higher Tariff Plans In US

Federal Reserve Chair Jerome Powell echoed a similar sentiment and expressed concerns over the tariff announcement by Donald Trump. He flagged the potential impact of new tariffs on the US itself. The new tariffs could cause much greater economic damage than expected, said Fed Chair Jerome Powell on Friday adding that Trump tariffs have made Fed's effort to curb inflation more challenging.

"While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth," news agency ANI quoted Powell.

Donald Trump's new tariffs will come into effect from Arpril 5. As per his tariff plan, a 10% tariff has been imposed on imports from all countries. There will be additional tariffs imposed on countries with wider trade deficit. These additional tariffs will come into effect from 9 April onwards. The US has imposed a 26% tariff on India, which will significantly impact information and technology, pharmaceuticals and automobiles sector companies.