Reciprocal tariffs: Global economists warn of impending US recession

IANS April 5, 2025 142 views

Global economists are sounding the alarm about a potential US recession triggered by Donald Trump's reciprocal tariffs. Leading financial institutions like JPMorgan, Citi, and UBS have dramatically lowered their economic growth projections, with some predicting GDP contraction. The tariffs are expected to significantly impact imports, hiring, and overall economic activity. Wall Street has already responded with a massive sell-off, reflecting widespread economic uncertainty.

"We now expect real GDP to contract under the weight of the tariffs" - Michael Feroli, JPMorgan Chase Chief US Economist
New Delhi, April 5: Global brokerages and economists have warned an impending US recession after factoring in the impact of reciprocal tariffs announced by the Donald Trump administration.

Key Points

1

JPMorgan forecasts -0.3% GDP growth for 2024

2

Economists predict significant import reduction

3

Fed expected to cut interest rates

4

Wall Street experiences massive sell-off

According to JPMorgan Chase & Co, "We now expect real GDP to contract under the weight of the tariffs, and for the full year (4Q/4Q) we now look for real GDP growth of -0.3 per cent, down from 1.3 per cent previously,"

The bank's chief US economist Michael Feroli said in a note to clients that the forecast contraction in economic activity is expected to depress hiring and over time to lift the unemployment rate to 5.3 per cent.

Feroli expects the US Federal Reserve to begin cutting its benchmark interest rate in June and proceed with rate cuts at each subsequent meeting through January next year.

"If realised, our stagflationary forecast would present a dilemma to Fed policymakers," Feroli wrote.

Citi economists have cut their forecast for growth this year to just 0.1 per cent while UBS economists reduced their forecast to a mere 0.4 per cent.

UBS Chief US Economist, Jonathan Pingle, said in a note that "We expect US imports from the rest of the world fall more than 20 per cent over our forecast horizon, mostly in the next several quarters, bringing imports as a share of GDP back to pre-1986 levels."

"The forcefulness of the trade policy action implies substantial macroeconomic adjustment for a $30 trillion economy," he projected.

On Friday, Fed Chair Jerome Powell said "it feels like we don't need to be in a hurry" to make any adjustments to rates.

His comments followed the release of the latest monthly employment report from the Bureau of Labor Statistics, which showed robust hiring in March alongside a slight uptick in the unemployment rate, to 4.2 per cent.

Meanwhile, Trump's reciprocal tariffs triggered a massive sell-off across Wall Street, with the Dow Jones plunging over 2,000 points, the S&P 500 witnessing its worst two-day sell-off since March 2020 and the Nasdaq entering the bear market territory.

Reader Comments

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Sarah K.
These tariffs feel like economic self-sabotage. We saw how this played out in 2018-2019 - why repeat the same mistakes? 😕 The numbers from JPMorgan and Citi are really concerning.
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Mark T.
The article presents a one-sided view. What about the long-term benefits of protecting domestic industries? Short-term pain for long-term gain should be considered too.
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Jamal R.
That 20% drop in imports prediction is wild! I work in logistics and we're already seeing orders getting canceled left and right. This is going to hit warehouse jobs first.
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Anita L.
Respectful criticism: The article could have included more perspectives from economists who support the tariffs. There are valid arguments on both sides of this policy debate.
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Dave P.
Powell's "no hurry" stance while the market tanks is concerning. The Fed needs to be more proactive here. 2000 point drop in the Dow is no joke! 😳
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Tanya M.
As a small business owner importing materials, these tariffs are going to destroy my profit margins. I might have to lay off staff or raise prices significantly.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Tags:
US Economy Donald Trump Recession Trade Tariffs Federal Reserve Wall Street Economic Forecast
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