JPMorgan Chase CEO Jamie Dimon mentioned Monday that tariffs introduced by President Donald Trump final week will doubtless 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 turn into a carefully learn 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 authentic causes for the newly introduced tariffs – and, after all, there are some – or the long-term impact, good or dangerous, there are more likely to be vital short-term results,” Dimon mentioned. “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’s going to decelerate progress,” he mentioned.
Dimon is the primary CEO of a serious Wall Avenue financial institution to publicly handle Trump’s sweeping tariff coverage as international 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 international markets, inflicting the worst week for U.S. equities for the reason that outbreak of the Covid pandemic in 2020.
His remarks seem to backtrack earlier feedback he made in January, when Dimon mentioned that individuals ought to “recover from” tariff issues as a result of they have been good for nationwide safety. On the time, tariff ranges being mentioned have been far decrease than what was unveiled final week.
Trump’s tariff coverage has created “many uncertainties,” together with its influence on international capital flows and the greenback, the influence to company earnings and the response from buying and selling companions, Dimon mentioned.
“The faster this problem is resolved, the higher as a result of a number of the destructive results improve cumulatively over time and could be exhausting to reverse,” he mentioned. “Within the brief 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 effectively for the previous few years, helped by practically $11 trillion in authorities borrowing and spending, it was “already weakening” in current weeks, even earlier than Trump’s tariff announcement, based on Dimon. Inflation is more likely to be stickier than many anticipate, which means that rates of interest may 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 somewhat excessive asset costs and volatility,” Dimon mentioned.
The JPMorgan CEO has been sounding a word of warning since at the very least 2022, when he mentioned a “hurricane” was heading for the U.S. economic system, due to the unwinding of Federal Reserve insurance policies and the Ukraine battle. However propped up by excessive authorities and shopper spending, the U.S. economic system defied expectations till now. The election of Trump in November initially boosted hopes round what a pro-growth administration would do.
Dimon struck a considerably ominous word in his letter Monday, contemplating how a lot U.S. shares have already fallen from their current highs. In line with the JPMorgan CEO, each shares and credit score spreads have been nonetheless probably too optimistic.
“Markets nonetheless appear to be pricing belongings with the belief that we’ll proceed to have a reasonably tender touchdown,” Dimon mentioned. “I’m not so certain.”
‘Important crossroads’
Underneath Dimon’s roughly twenty years of management, JPMorgan has turn into the most important U.S. financial institution by belongings and market capitalization. Final yr was its seventh in a row of report revenues, he famous.
However the financial institution 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 sturdy,” Dimon mentioned. Each the U.S. and world are at a “essential crossroads,” he mentioned.
Whereas the phrase “Trump” did not seem as soon as in his 59-page letter, Dimon affirmed a number of of the president’s priorities, together with immigration; addressing commerce imbalances, particularly with China; and deregulation.
However Dimon argued for deep reform and strengthening of a worldwide system that has led to a long time of peace and prosperity, led by America for the reason that finish of World Battle II, somewhat than abandoning that order.
“If given the chance, that’s precisely what our adversaries wish to occur: Tear asunder the intensive navy and financial alliances that America and its allies have solid,” Dimon mentioned.
“Within the multipolar world that follows, it is going to be each nation for itself – giving our adversaries the chance to set the foundations and use navy and financial coercion to get what they need.”
Dimon had a number of prescriptions to satisfy the challenges of the day, together with restoring civic delight, acknowledging and addressing issues together with immigration and unfair commerce insurance policies with frequent sense, and sustaining the U.S. navy “at no matter price.”
“Economics is the longtime glue, and America First is okay,” Dimon mentioned, “so long as it would not find yourself being America alone.”
