Trump’s Tariff Shock: JPMorgan warns of recession, job losses, shrinking GDP, and soaring prices

U.S. economy is heading into troubled waters. That’s the latest warning from J.P. Morgan, which on Friday forecasted a full-year contraction in gross domestic product for 2025 — the first major Wall Street institution to do so.

“We now expect real GDP to contract under the weight of the tariffs, and for the full year (4Q/4Q) we now look for real GDP growth of -0.3 per cent, down from 1.3 per cent previously,” said Michael Feroli, the firm’s chief U.S. economist, in a note to clients, as reported by Bloomberg.

Feroli anticipates a two-quarter recession in the second half of 2025, with GDP shrinking 1% in Q3 and 0.5% in Q4. The cause? A dramatic escalation in U.S. trade policy under President Trump.

Trump’s tariffs shake the markets

Just days earlier, Trump unveiled sweeping new tariffs — a 10% base duty on all imports, with harsher levies on select partners like Mexico and Canada. Markets were quick to react. The Dow Jones Industrial Average plunged 2,231 points on Friday alone, its worst day since the pandemic crash of March 2020. The S&P 500 fell 6%, and the tech-heavy Nasdaq dropped 5.8%, pushing it into a bear market.

Altogether, U.S. markets lost $5.4 trillion in value over two trading sessions.

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Trump’s latest tariff move adds to a growing list of trade battles. China has already hit back, slapping a 34% reciprocal tax on U.S. goods. Other nations are threatening to follow suit or enter tense negotiations.

Jobs and wallets on the line

Feroli warned that the economic slump could have painful consequences for American workers. “The forecasted contraction in economic activity is expected to depress hiring and over time to lift the unemployment rate to 5.3 per cent,” he wrote.

That would be a steep