As global markets reel from renewed trade tensions, JPMorgan is sounding the alarm: a global recession may now be more likely than not.
In a recent client note ominously titled “There Will Be Blood,” JPMorgan Chief Economist, Bruce Kasman, warned that President Trump’s aggressive new tariff plan could deliver a shockwave to the global economy.
The bank has now raised the probability of a global recession in 2025 to 60%, up from 40% – a sharp shift driven by mounting fears of a full-blown trade war.
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A Historic Tax Shock for the U.S.
Kasman didn’t mince words, calling the tariffs ‘the largest tax hike on U.S. households and businesses since 1968.’
The proposed measures include tariffs ranging from 10% to 50% on a wide array of imported goods from dozens of countries – significantly escalating the potential for retaliatory action, supply chain disruptions, and declining business sentiment in the U.S.
“The effects of this tax hike are likely to be magnified,” Kasman wrote, citing risks of global retaliation and erosion of confidence among American companies.
The U.S. Dollar Index plunged more than 2% in premarket trading following the announcement, falling to its lowest level since October 2024. The drop signals growing investor anxiety and a shift toward safe-haven assets as uncertainty rattles traditional financial markets.
While JPMorgan has not yet made official changes to its economic forecasts, the tone is unmistakably cautious. Kasman noted that if these trade policies are implemented and sustained, they would likely trigger a recession in the U.S. and “possibly the global economy” before year’s end.
Other major financial institutions are also adjusting their outlooks:
- Goldman Sachs has increased its estimated probability of a U.S. recession in 2025 from 20% to 35%, citing escalating trade tensions and policy risks.
- Deutsche Bank issued a warning earlier this week about a potential dollar crisis, reinforcing growing concerns in the banking sector.
DOLLARISATION | Leading Global Bank Warns of Potential Dollar Crisis Amid Trade Tensions
The financial fallout has been swift, with global stock markets tumbling, oil prices declining, and bond yields retreating as investors brace for a potential economic slowdown.… pic.twitter.com/D827OikNWP
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For the crypto market, rising macro uncertainty often fuels interest in decentralized and non-sovereign assets. As fiat markets grow more unstable and policymakers double down on protectionist measures, investors may increasingly turn to digital assets like Bitcoin and stablecoins as hedges against fiat devaluation and economic turmoil.
This shift in global economic sentiment could mark a pivotal moment—not just for traditional finance, but for crypto’s role in the broader financial system.
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