According to J.P. Morgan, the chances of a recession in the U.S. and globally have increased to 60%, up from 40%. This rise is attributed to President Trump's implementation of reciprocal tariffs. Trump's recent move includes a 10% baseline tariff on all imports to the U.S. and higher duties on numerous other countries. J.P. Morgan strategists, led by Bruce Kasman, stated that disruptive U.S. policies pose the biggest threat to the global economic outlook this year. They pointed out that the U.S. trade policy has become less favorable for businesses than initially expected. The impact of these tariffs is expected to be amplified by retaliatory measures, reduced business confidence in the U.S., and disruptions in the supply chain.

Several other Wall Street firms, including Barclays and Deutsche Bank, have also expressed concerns about the heightened risk of a recession if Trump's tariffs persist. Despite the uncertainty, Kasman believes that any negative effects of the tariffs will be somewhat mitigated by potential U.S. interest rate cuts. J.P. Morgan has restated its prediction of two 25-basis point rate reductions by the Federal Reserve in June and September. Market data collected by LSEG reveals that investors anticipate a total of four rate cuts by 2025.