Trump tariffs: 'There will be blood', JPMorgan warns of economic anxiety, 60% global recession odds

There is growing economic unease on Wall Street in response to Donald Trump's recent implementation of widespread tariffs, prompting leading banks to issue warnings of a possible recession. According to a report from Bloomberg, JPMorgan's Chief Economist Bruce Kasman has estimated a 60% likelihood of a global recession in 2025, a significant increase from the previous forecast of 40%.

Kasman emphasized the potential amplification of the tariff effects through retaliatory measures, decreased US business sentiment, and disruptions in the supply chain, as outlined in his publication titled "There Will Be Blood."

International brokerage firms have issued warnings regarding the potential negative repercussions on both the Indian and US economies due to recent tariff hikes. These actions have also sparked sharp reactions on a global scale.

Goldman Sachs has also expressed similar apprehensions, raising its recession probability from 20% to 35% within the next year. Additionally, the firm has revised its 2025 GDP projection to a mere 1% growth and anticipates an uptick in the unemployment rate to 4.5%. "The escalation in our recession likelihood reflects a marked decline in both consumer and business confidence in the economic outlook over the past month," stated Goldman's report.

ASK Private Wealth has raised concerns about the potential impact of tariffs on the US economy, warning of heightened economic uncertainty that could result in stagflation. The firm emphasized the risk of retaliation and rollback, indicating a rise in trade barriers to levels not seen since the 1800s.

Similarly, UBS, a brokerage firm, suggested that there is a 50% chance of tariffs being reduced by the end of the year. However, they highlighted the short-term adverse effects on the US economy, with an expected slowdown in growth to around 1% by 2025. Even if tariffs are eventually decreased, UBS anticipates a near-term economic slowdown due to the initial shock and uncertainty.

In a more pessimistic scenario where tariffs persist or escalate, UBS foresees the possibility of a US recession and significant interest rate cuts by the Federal Reserve. These warnings underscore the potential negative repercussions of ongoing trade tensions on the US economy.

Deloitte has noted that India's textiles and apparel exports, which were valued at over $8 billion in 2024, are at risk of significant impact. With these products operating on narrow profit margins and being highly price-sensitive, a 10-20 per cent increase in tariffs could make Indian textiles less competitive compared to countries with more advantageous trade agreements.

In contrast, Jefferies provided a more optimistic outlook by highlighting that the tariffs do not directly affect major Indian export sectors such as IT services, pharmaceuticals, and automobiles. The firm also characterised the 27 per cent tariff as "reasonable" when considering the broader global context.

Jefferies said “the 27 per cent tariff on India is looking reasonable from a relative perspective. Bigger worries are on weaker US economic outlook, which is a -ve for IT services and other exporters. However, it warned that a weakening US economy could hurt demand for Indian exports, especially in IT services”.