U.S. Recession Risk Climbs to 60% After New Tariffs
The possibility of a U.S. and global recession in 2025 has increased sharply. According to J.P. Morgan, the risk of a recession has jumped to 60% from an earlier estimate of 40%. This rise in economic uncertainty comes after former President Donald Trump announced new reciprocal tariffs on all imports to the United States.
On April 5, Trump implemented a 10% base tariff on all imported goods, with even higher rates for countries that maintain large trade surpluses with the U.S. or impose steep tariffs on American goods. Experts believe this policy could seriously affect both U.S. business sentiment and the global economy.
What Are Reciprocal Tariffs and Why Is Trump Imposing Them?
Trump’s Argument: America Has Been Treated Unfairly
Donald Trump has long argued that the United States has been treated unfairly in global trade. He claims that many U.S. allies have imposed high tariffs on American exports, while the U.S. has allowed their products in with little or no tariff.
In his own words:
“We are finally putting America first.”
“Trade deficits are not just an economic problem—they’re a national emergency.”
“It’s not full reciprocal, it’s kind reciprocal.”
“Countries like India charge us 52%, and we’ve been charging almost nothing for decades.”
What the New Tariff Policy Includes
Under the new policy:
A 10% baseline tariff applies to all imported goods entering the U.S.
Higher tariffs are imposed on countries that charge high duties on U.S. goods or have large trade surpluses.
Tariff rates are set at around 50% of what each country charges the U.S., a move Trump calls “kind reciprocal” instead of fully equal.
How Trump’s Tariff Policy Could Trigger a Global Recession
J.P. Morgan’s Warning on Recession Risks
According to J.P. Morgan analysts, led by Bruce Kasman, U.S. trade policy has become less business-friendly than expected. The firm warns that the new tariffs could lead to:
Retaliatory tariffs from other countries
Decline in U.S. business confidence
Disruptions in global supply chains
These combined effects could slow down economic activity in both the U.S. and globally. As a result, recession risks are now significantly higher than they were just months ago.
Other Banks Agree: Recession Is More Likely
Other financial firms, including Barclays and Deutsche Bank, have issued similar warnings. They say the U.S. economy could face a downturn if these tariffs remain in place throughout the year. Barclays has even said the economic signals are flashing red, pointing to serious risks of a recession in the coming months.
Deutsche Bank estimates that the latest US tariffs could reduce Europe’s GDP by 0.4% to 0.7%, and the UK’s GDP by 0.3% to 0.6%.
What About Interest Rates? Will the Fed Step In?
To combat potential economic slowdown, J.P. Morgan still expects the U.S. Federal Reserve to cut interest rates twice this year—in June and September. Lower interest rates make borrowing cheaper for businesses and consumers, which can help support economic growth.
Morgan Stanley has changed its prediction and now believes the US Federal Reserve won’t cut interest rates in June as earlier expected. This change happened after Donald Trump revealed plans for big new tariffs. According to the bank, these tariffs could push inflation higher. As a result, Morgan Stanley now expects the Fed to delay rate cuts until March 2026.
Update
China to impose an additional 34% tariff on all U.S. imports starting April 10.
