J.P. Morgan has predicted that the United States economy is likely headed toward a recession by the end of this year, citing the economic strain of new tariffs introduced by President Donald Trump. In a note to investors released Friday, Michael Feroli, the bank’s chief U.S. economist, projected a contraction in GDP “under the weight of the tariffs” and an increase in the unemployment rate to 5.3%.
The warning follows Trump’s April 2 announcement of reciprocal tariffs, which impose a 10% base tariff on all imports starting April 5, with higher, country-specific tariffs—including a 26% tariff on Indian exports—effective from April 9. The move aims to address trade imbalances with top U.S. trading partners.
Federal Reserve Chair Jerome Powell echoed concerns, stating during a business journalism conference that the economic impact of the tariffs could be more severe than anticipated, posing challenges for inflation control and economic stability. “Uncertainty remains elevated,” Powell noted, adding that both inflation and slower growth are likely outcomes.
Despite the bleak U.S. forecast, global brokerage Jefferies downplayed the impact on India. In its analysis, the firm said India’s key export sectors—like IT services, pharmaceuticals, and automobiles—are not directly hit by the tariff measures. It also called the 26% tariff on Indian goods “reasonable” relative to steeper duties on other nations.
However, Jefferies cautioned that a U.S. economic downturn could still weaken demand for Indian exports, particularly in IT services, which rely heavily on the U.S. market. “The bigger concern is the weakening U.S. economy, which is a negative for Indian exporters,” the firm noted.
While India’s export resilience may offer some cushion, the global ripple effects of U.S. trade policy and economic slowdown remain a growing concern for emerging markets and investors worldwide.
