Economic slowdown: Tariff effect: Will we face recession this year? JPMorgan Chase has the answer to this question. Continue reading to find out

JPMorgan raised its estimates of the U.S. recession that occurred before the end of the year. The bank now sees a 60% probability, higher than its previous 40% estimate. President Donald Trump announced the increase after new tariffs. These tariffs affect global markets and business conditions.

Increase recession risk

JPMorgan, the largest bank in the United States, has issued a new report on economic risks. Chief economist Bruce Kasman said U.S. policy remains a major global focus. The latest trade policies have exacerbated concerns about the recession. If these policies continue, they could lead to a recession in the United States and the world. The bank updated its probability model to increase the chances of a recession to 60%.

The impact of tariffs on trade

When economic growth declines for two consecutive quarters, a recession occurs. Trump announced 10% tariffs on most U.S. imports. Higher tariffs apply to specific countries. Vietnam faces 46% tariffs, China also faces 34% tariffs, in addition to the existing 20%, the EU faces 20% and Japan faces 24%. The government said the tariffs target unfair trade practices.

Impact on businesses and consumers

Casman’s report describes these tariffs as increased taxes. It noted that they raised the overall tax rate on imported goods by about 22 percentage points, an estimated 24%. Higher costs for businesses and consumers may slow down spending and investment, leading to a contraction of the economy.

Wall Street’s attention

Many analysts are worried that rising tariffs will hurt economic growth. They fear inflation will increase while unemployment will rise. Some investors expect financial markets to react negatively to these policies. Other research firms, including Barclays, Bank of America Global Research, Deutsche Bank, Royal Bank of Canada Capital Markets and UBS Global Wealth Management, also warned that a recession could occur if the tariffs remain.

FAQ

How do tariffs affect the economy?
Tariffs increase the cost of imported goods. Businesses may raise prices or lower spending. Consumers pay more and economic growth slows down, increasing the risk of recession.Why does JPMorgan increase its probability of recession?
JPMorgan has raised its estimates due to new tariffs. The bank believes that these policies can slow down business activities, increase costs and reduce economic growth.