JP Morgan’s chief executive, Jamie Dimon, has warned that it may be “hard to reverse” the effect of Donald Trump’s tariffs, which he said would drive prices higher and make a US recession more likely.
The boss of the US bank said in his annual letter to investors that while there were some “legitimate reasons” for the number of new taxes applied to goods imported into the US, there could be some serious consequences if the tariffs were maintained for too long.
“There are many uncertainties surrounding the new tariff policy: the potential retaliatory actions, including on services, by other countries, the effect on confidence, the impact on investments and capital flows, the effect on corporate profits and the possible effect on the US dollar,” Dimon said.
“The recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession.”
He stopped short of naming individual countries, but warned that this kind of “fragmentation” could play straight into the hands of the US’s geopolitical rivals.
“If the western world’s military and economic alliances were to fragment, America itself would inevitably weaken over time.” He said this was “precisely what our adversaries want”.
The comments came as global stock markets suffered their third straight day of declines in reaction to Trump’s sweeping tariffs, which have sparked fears of a global trade war and a slowdown in economic growth – particularly in the US.
“I am hoping that after negotiations, the long-term effect will have some positive benefits for the United States. My most serious concern is how this will affect America’s long-term economic alliances”, Dimon said.
“The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse.”
The bank boss acknowledged that the US had a right to overhaul trade deals in cases where it was clearly being “treated unfairly”.
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However, it was important to “acknowledge that we have sometimes treated others unfairly”, including through the implementation of the Inflation Reduction Act in 2022, a big climate and healthcare spending package, which favoured American businesses.
Dimon also said any new trade policy should be combined with a programme that would help retrain workers, provide income assistance, and relocate workers directly affected by trade.
“There are many ways to combat unfair trade – industrial policy is one of them, but it should be done right or not at all,” Dimon said.
