President Trump’s wave of tariffs threatens to bring both short-term economic pain, including lower growth, and long-term damage to America’s standing and trade relationships around the world, the chief executive of Wall Street’s biggest bank warned on Monday.
“The recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession,” Jamie Dimon, JPMorgan Chase’s chief executive, wrote in his annual letter to shareholders.
The warning by Mr. Dimon, one of Wall Street’s most influential leaders, echoes the growing anxiety among corporate chiefs about how the tariffs will play out. Even those who had initially professed support for Mr. Trump’s trade plans are becoming increasingly worried about the consequences.
Even before Mr. Trump’s tariff announcement last week, the U.S. economy had been showing signs of strain after years of healthy performance, Mr. Dimon wrote. Inflation was already a worry, he said, pointing to a yawning fiscal deficit and the need for more infrastructure spending. And stock valuations remain well above historical averages, even after the recent market sell-off.
The potential consequences of the trade fight could make things worse, the letter said. Those include other countries’ efforts to fight back — as China has done by imposing 34 percent counterlevies — and a possible erosion of confidence among consumers and investors. Mr. Dimon also warned about the weakening of the American dollar’s role as the global reserve currency.
“If America, for whatever reason, becomes a less attractive investment destination, the U.S. dollar and the economy could suffer if foreigners sold their U.S. assets,” he wrote.
JPMorgan’s own economists have increasingly been saying a recession is more likely this year, though Mr. Dimon did not personally take a position on those odds in his shareholder letter.
While he asserted that JPMorgan itself was strong enough to withstand the shocks that the levies posed — its traders have profited from previous whipsaws in the markets — the global economy may not be so fortunate. “It is not particularly good for the capital markets,” Mr. Dimon wrote of the tariff-linked volatility.
For now, Mr. Dimon wrote, he is hoping for a speedy resolution to the trade battles. “The quicker this issue is resolved, the better, because some of the negative effects increase cumulatively over time and would be hard to reverse,” he wrote.
The longer-term worry, Mr. Dimon said, is that Mr. Trump’s fight could shred decades-old alliances that cemented the United States’ primacy in the global order. The JPMorgan chief wrote that he was worried that America’s trading partners might seek out deals with the likes of China, Iran or Russia in response to the tariffs.
“America First is fine,” Mr. Dimon wrote, referring to Mr. Trump’s description of his policies, “as long as it doesn’t end up being America alone.”
