“There will be blood”: JPMorgan warns of 60% global recession odds under Trump Tariffs

A wave of economic anxiety has gripped Wall Street following Donald Trump's sweeping new tariffs, with leading banks warning of an impending recession. As reported by Bloomberg, JPMorgan’s Chief Economist Bruce Kasman now sees a 60% chance of a global recession in 2025, up from 40%. “The effect of this tax hike is likely to be magnified—through retaliation, a slide in US business sentiment, and supply chain disruptions,” Kasman wrote in a note titled There Will Be Blood.

Goldman Sachs echoed the concerns, raising its recession probability from 20% to 35% in the next 12 months. The firm also slashed its 2025 GDP forecast to just 1% and projected a rise in the unemployment rate to 4.5%. “The increase in our recession probability reflects the sharp deterioration in household and business confidence in the outlook over the last month,” Goldman’s report stated.

Markets and consumers rattled
Financial markets reacted sharply to the tariff announcement, with the S&P 500 suffering its worst day since 2020. Consumer confidence has also plummeted, with the University of Michigan’s sentiment survey showing the highest percentage of Americans expecting unemployment to rise since the Great Recession. “While sentiment has been a poor predictor over activity in recent years, we are less dismissive of the recent decline because economic fundamentals are not as strong as in prior years,” Goldman Sachs noted.

Mark Zandi, Chief Economist at Moody’s Analytics, has also raised his recession forecast from 15% to 40%. “The intensifying trade war and government spending cuts are behind this,” he wrote on X. Zandi highlighted Trump’s 25% tariffs on imported cars and parts, alongside expected retaliatory measures from trade partners, as key risk factors.

Trump stands firm
Despite economic warnings, Trump remains adamant about his tariff strategy. Speaking aboard Air Force One, he dismissed speculation that tariffs would target only a handful of countries, insisting, “You’d start with all countries, so let’s see what happens.” The White House has projected that tariffs could generate up to $600 billion in revenue per year, a claim met with scepticism by economists who argue that consumers and businesses will bear the cost.

White House trade adviser Peter Navarro defended the policy, arguing that tariffs are essential to rebuilding American manufacturing. “America cannot just be an assembler of foreign-made parts—we must become a manufacturing powerhouse that dominates every step of the supply chain of industries that are critical for our national security and economic interests,” he said in a statement.

The inflation factor
Goldman Sachs now expects core inflation to hit 3.5% by the end of 2025, up from a previous estimate of 3%. Higher tariffs are expected to drive up consumer prices, with the cost of goods rising across multiple sectors. “Higher tariffs are likely to boost consumer crises,” Goldman warned, noting that inflation-adjusted incomes will take a hit.

The Federal Reserve, facing mounting economic pressures, is now expected to cut interest rates three times this year to cushion the impact. However, rate cuts may not be enough to offset the damage inflicted by the tariffs.

As global trade partners weigh their responses, fears of a tit-for-tat tariff war are growing. Several economists have warned that the US economy may be heading towards a “recession by design,” as Trump’s policies put pressure on businesses, workers, and consumers alike.

Goldman Sachs has already adjusted its projections for reciprocal tariffs, expecting an average 15% hike across all US trading partners. Exemptions for certain countries and products could lower this impact, but the overall trajectory remains concerning.

Mark Hamrick, Senior Economic Analyst at Bankrate, summed up the situation: “Between trade war escalations, economic uncertainty, and rising inflation, the risks to the economy are growing. This includes the possibility of a recession in the US in the coming 12 months.”

With the global economy on edge and market instability rising, all eyes are now on the White House and the Federal Reserve as they navigate an increasingly volatile economic landscape.

(With inputs from Bloomberg)