JPMorgan Chase analysts issued a stark warning that the U.S. economy could be pushed “perilously close to slipping into recession” following former President Donald Trump’s announcement of sweeping new tariffs.
The warning came just hours after Trump’s Rose Garden speech on Wednesday, where he declared the tariffs “liberation day.” The move targeted imports from China and the European Union and sent shockwaves through global financial markets.
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JPMorgan analysts said the proposed tariffs would represent “the largest tax increase since the Revenue Act of 1968,” estimating they would generate nearly $400 billion in revenue — around 1.3% of U.S. GDP. In their economic outlook, the analysts noted the potential for personal consumption expenditure (PCE) prices to rise as much as 1.5% this year.
“The resulting hit to purchasing power could take real disposable personal income growth in 2Q-3Q into negative territory, and with it the risk that real consumer spending could also contract in those quarters,” they wrote. “This impact alone could take the economy perilously close to slipping into recession. And this is before accounting for the additional hits to gross exports and to investment spending.”
In addition to the economic strain on consumers, the report criticized the lack of clarity around the policy’s long-term implications. “The somewhat confusing nature of today’s news, coupled with uncertainty over how long these tariffs will remain in place, should make for an even less friendly environment for investment spending,” they added.
Critics across the political spectrum quickly reacted to the bleak outlook. Conservative policy analyst James Pethokoukis called the report “bad, bad, bad” on X, while CNBC’s Carl Quintanilla posted, “Tough language from JPMorgan tonight” on Bluesky.
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Democratic strategist Ian Sams echoed JPMorgan’s framing of the tariffs as the “largest tax increase since 1968,” a point that conservative attorney George Conway emphasized further. “As a percentage of GDP. In absolute terms, perhaps the largest tax increase in the history of the human race?” Conway wrote.
Elsewhere on Bluesky, experts raised alarm over broader economic instability. “Even they are calling the insurance/property crisis the ‘doom loop’ now,” posted Boston University law professor Madison Conway. Columbia Law School’s Justin Gundlach added: “This particular crisis being bumped out of the top 3 (maybe 5!)… is leaving me shook, Madison!”
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