TLDR
- JPMorgan CEO Jamie Dimon warns that Trump’s tariffs could increase inflation and recession probability
- Global markets including crypto have fallen with Bitcoin dropping below $79,000
- Dimon cautions that price increases will affect both imported and domestic goods
- He expressed concerns about potential “stagflation” similar to the 1970s
- While supporting “America First” policies, Dimon warns against “America alone” approach
JPMorgan Chase CEO Jamie Dimon has issued a stark warning about the potential economic fallout from President Donald Trump’s tariff policies.
In his annual letter to shareholders released Monday, Dimon cautioned that the recently announced tariffs could drive up inflation and increase the likelihood of a U.S. recession.
“The recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession,”
Dimon wrote in his 58-page letter. He noted that while a recession isn’t certain, the tariffs “will slow down growth.”
The warning comes as global markets, including cryptocurrencies, have experienced sharp declines. Bitcoin fell below $79,000 to its lowest point since November and currently trades at around $78,235. The CoinDesk 20, which tracks the largest crypto assets, has dropped more than 10% in a day and nearly 20% over the past month.
Market Reactions and Price Concerns
Dimon explained that the tariffs will affect prices beyond just imported goods. Even domestic prices are expected to rise as a result of the policy changes.
“Whatever you think of the legitimate reasons for the newly announced tariffs – and, of course, there are some – or the long-term effect, good or bad, there are likely to be important short-term effects,” he stated.
The JPMorgan CEO’s comments reflect broader market concerns about the economic direction under Trump’s trade policies. Global markets began falling on Sunday in anticipation of Monday’s tariff announcement.
These market reactions highlight investor uncertainty about the economic impact of heightened trade barriers. The cryptocurrency sector, often sensitive to macroeconomic factors, has shown particular vulnerability to these policy shifts.
Stagflation Warnings and Interest Rate Concerns
In his letter, Dimon also raised the specter of “stagflation,” referring to the economic condition that combines high inflation, high unemployment, and slow economic growth – similar to what occurred in the 1970s.
“While inflation has come down, most of what I see in the future is inflationary,” he wrote. Dimon cited several factors, including “continued high fiscal deficits, the remilitarization of the world and the need for infrastructure investment.”
The banking executive predicted that these inflationary pressures would create a “tug-of-war” over interest rates. He suggested that long-term borrowing costs would ultimately trend higher.
“All things being equal, the slower the growth, the lower the interest rates, and the higher the inflation, the higher the interest rates,” Dimon explained. He added, “This tug-of-war can go on for some time, but it’s good to remember that in the stagflation of the 1970s, recessions did not stop the inexorable trend of rising rates.”
International Relations and Policy Balance
While expressing support for Trump’s “America First” foreign policy approach, Dimon cautioned against what he called “America alone.”
“If the Western world’s military and economic alliances were to fragment, America itself would inevitably weaken over time,” he warned in his letter.
Dimon touched on various problems facing the United States and offered what he called “common sense” solutions. These included tightening border security and addressing special interests.
The CEO also commented on the state of public discourse, noting that Americans are “meaner to each other” and that “a little more kindness and understanding would go a long way.”
His annual letter addresses a range of topics beyond economic concerns, including immigration and civil discourse. Dimon stated that he supports certain policy positions from both Democratic and Republican parties.
JPMorgan posted record earnings in 2024, with $54 billion in profit. The company’s stock has risen approximately 6% over the past year, trading at about $210 per share in early April.
The market response to Dimon’s warnings has been swift. Stock markets have already experienced a two-day sell-off last week, with fears of recession becoming more prominent in financial discussions.
Dimon hinted that more market pain might be ahead.
“No matter how you measure it, equity valuations are still well above their historical averages,” he wrote. “Markets still seem to be pricing assets with the assumption that we will continue to have a fairly soft landing. I am not so sure.”
