Global brokerages and economists are warning of an impending US recession, following the impact of reciprocal tariffs announced by the Donald Trump administration.

JPMorgan Chase & Co has revised its outlook, now expecting real GDP to shrink under the weight of these tariffs. “We now expect real GDP growth for the full year (Q4/Q4) to be -0.3 per cent, down from our previous estimate of 1.3 per cent,” said Michael Feroli, the bank’s chief US economist.

Feroli noted that this contraction in economic activity is likely to slow hiring and raise the unemployment rate to 5.3 per cent over time. He anticipates the US Federal Reserve will begin cutting its benchmark interest rate in June and continue doing so at each meeting through January.

“If realised, our stagflationary forecast would present a dilemma to Fed policymakers,” Feroli added.

Economists at Citi have slashed their US growth forecast for the year to just 0.1 per cent, while UBS lowered theirs to 0.4 per cent.

UBS Chief US Economist Jonathan Pingle commented, “We expect US imports from the rest of the world to fall more than 20 per cent over the forecast horizon, mostly within the next few quarters. This would return imports as a share of GDP to pre-1986 levels.”

Pingle emphasized that the aggressive trade policy is likely to drive major macroeconomic adjustments for the $30 trillion US economy.

Meanwhile, Federal Reserve Chair Jerome Powell said Friday, “It feels like we don’t need to be in a hurry” to change interest rates. His comments came after the latest employment report showed solid job gains in March, even as the unemployment rate inched up to 4.2 per cent.

Trump’s tariff move has already sparked a major market reaction. Wall Street saw a sharp sell-off, with the Dow Jones Industrial Average plummeting over 2,000 points. The S&P 500 recorded its worst two-day drop since March 2020, while the Nasdaq slipped into bear market territory.