JPMorgan Chase CEO Jamie Dimon stated Monday that tariffs introduced by President Donald Trump final week will seemingly enhance costs on each home and imported items, weighing down a U.S. economic system that had already been slowing.
Dimon, 69, addressed the tariff coverage Trump introduced on April 2 in his annual shareholder letter, which has develop into a closely-read screed on the state of the economic system, proposals for the problems dealing with the U.S. and his tackle efficient administration.
“No matter you consider the official causes for the newly introduced tariffs – and, in fact, there are some – or the long-term impact, good or unhealthy, there are more likely to be necessary short-term results,” Dimon stated. “We’re more likely to see inflationary outcomes, not solely on imported items however on home costs, as enter prices rise and demand will increase on home merchandise.”
“Whether or not or not the menu of tariffs causes a recession stays in query, however it would decelerate progress,” he stated.
Dimon is the primary CEO of a serious Wall Road financial institution to publicly handle Trump’s sweeping tariff coverage as world markets crash. Although the JPMorgan chairman has typically used his platform to spotlight geopolitical and monetary dangers he sees, this yr’s letter comes at an unusually turbulent time. Shares have been in freefall since Trump’s announcement shocked world markets, inflicting the worst week for U.S. equities because the outbreak of the Covid pandemic in 2020.
His remarks seem to backtrack earlier feedback he made in January, when Dimon stated that individuals ought to “recover from” tariff issues as a result of they had been good for nationwide safety. On the time, tariff ranges being mentioned had been far decrease than what was unveiled final week.
Trump’s tariff coverage has created “many uncertainties,” together with its affect on world capital flows and the greenback, the affect to company earnings and the response from buying and selling companions, Dimon stated.
“The faster this difficulty is resolved, the higher as a result of among the damaging results enhance cumulatively over time and can be exhausting to reverse,” he stated. “Within the quick run, I see this as one massive extra straw on the camel’s again.”
‘Not so certain’
Whereas the U.S. economic system has carried out properly for the previous few years, helped by almost $11 trillion in authorities borrowing and spending, it was “already weakening” in current weeks, even earlier than Trump’s tariff announcement, in response to Dimon. Inflation is more likely to be stickier than many anticipate, which means that rates of interest might stay elevated even because the economic system slows, he added.
“The economic system is dealing with appreciable turbulence (together with geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and ‘commerce wars,’ ongoing sticky inflation, excessive fiscal deficits and nonetheless fairly excessive asset costs and volatility,” Dimon stated.
Dimon additionally struck a considerably ominous be aware contemplating how a lot U.S. shares have already fallen from their current highs. Based on the JPMorgan CEO, each shares and credit score spreads had been nonetheless probably too optimistic.
“Markets nonetheless appear to be pricing property with the belief that we are going to proceed to have a reasonably mushy touchdown,” Dimon stated. “I’m not so certain.”
Underneath Dimon’s roughly 20 years of management, JPMorgan has develop into the most important U.S. financial institution by property and market capitalization. Final yr was its seventh in a row of file revenues, he famous.
However the agency is reliant on “whether or not the long-term well being of America, domestically, and the way forward for the free and democratic world are robust,” Dimon stated.
This story is growing. Please examine again for updates.
