JPMorgan Raises Risk of U.S., Global Recession to 60%

By James Glynn

SYDNEY--The risks of a recession in the U.S. and global economies have soared to 60% from 40% with the announcement this week of the Trump administration's sweeping new tariff regime, according to Wall Street banking giant JPMorgan.

"Disruptive U.S. policies have been recognized as the biggest risk to the global outlook all year," Bruce Kasman, chief economist and head of global economic research at JPMorgan, said.

"The latest news reinforces our fears as U.S. trade policy has turned decisively less business-friendly than we had anticipated," he added.

The bank's outlook for 2025 recognized that the Trump administration would move aggressively on multiple fronts, but incorporated their underlying commitment to support U.S. business and the life of the economic expansion, Kasman said.

This commitment was expected to limit extremes and be reflected in a lift in U.S. business sentiment that tempered expected drags from rising U.S. tariffs and lower immigration flows, he added.

However, the "Liberation Day" tariff announcement leads to a further reassessment.

"The U.S. policy mix appears to be shifting further from supporting the current expansion," he said.

The direct effect would be the largest tax increase on U.S. households and business since 1968, which preceded the 1969-70 recession, Kasman said.

"The effect of this tax hike is likely to be magnified--through retaliation, a slide in U.S. business sentiment, and supply-chain disruptions," he added.

"We view the full implementation of announced policies as a substantial macroeconomic shock not currently incorporated in our forecasts . . . these policies, if sustained, would likely push the U.S. and possibly global economy into recession this year," he said.

Write to James Glynn at james.glynn@wsj.com