J P Morgan projected that the United States will slip into a recession by the end of 2025, attributing the decline largely to President Donald Trump’s newly announced reciprocal tariffs. The forecast comes days after Trump imposed sweeping duties on imports in a bid to rebalance trade ties, with further hikes targeted at countries with major trade deficits with the US, including India.
In a note released Friday, Michael Feroli, chief US economist at J P Morgan , wrote that America’s gross domestic product is likely to shrink “under the weight of the tariffs.” He further warned that the resulting economic slowdown is expected to “push the unemployment rate up to 5.3 [percent],” according to The Hill.
The concerns were echoed by US Federal Reserve Chair Jerome Powell, who said the tariffs could deal a heavier blow to the economy than previously estimated. Speaking at a business journalism conference on Friday, Powell said, “While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
Under the new policy, a 10% tariff applies to all imports beginning April 5. From April 9, countries with the largest US trade deficits—India among them—will face higher, customised levies. India will see a 26% tariff on all its exports.
Despite this sharp hike, brokerage firm Jefferies said the effect on India’s outbound trade may be limited. In a client note, the firm pointed out that major Indian export sectors—such as IT services, pharmaceuticals, and automobiles—are not directly hit by the tariff escalation.
“The 27 per cent (now corrected in a document to 26 per cent) tariff on India is looking reasonable from a relative perspective. Bigger worries are on weaker US economic outlook, which is a -ve for IT services and other exporters,” Jefferies noted. While the firm played down direct tariff consequences, it cautioned that a broader US slowdown may weigh on demand for Indian exports, particularly in technology services.
The global economic outlook now faces further pressure as businesses brace for the cascading effects of the escalating US trade war.