JPMorgan Warns of Economic Risks from Potential Trump Policies

JPMorgan Chase has issued a warning about the economic consequences of the upcoming presidential election.

In an interview with Bloomberg, JPMorgan’s Chief Global Strategist, David Kelly, discussed former President Trump’s proposal to increase tariffs on imports to lower income taxes. Kelly suggests that if Trump wins and implements significant tariff hikes, it could lead to stagflation—a combination of slow growth and rising inflation.

Kelly noted that the debate outcomes have increased the chances of a Republican sweep in November. He emphasized that higher tariffs could slow economic growth while pushing up inflation, creating stagflation.

Additionally, Kelly mentioned that the economy is currently fragile enough that any policy shock, such as Trump’s aggressive stance on immigration, could trigger a recession. He cited Trump’s potential immigration policies, including the deportation of undocumented immigrants, as another risk factor.

Kelly also addressed the uncertainty surrounding Trump’s 2017 tax cuts. He explained that if Joe Biden is reelected, some of these tax cuts might be extended beyond 2025, but not all. In contrast, a Trump victory could lead to the full extension of these tax cuts, which would increase the national debt and result in higher long-term interest rates.

Kelly did not specifically comment on his economic outlook under a second term for Biden. However, JPMorgan Chase CEO Jamie Dimon previously mentioned that he believes some of Biden’s current economic policies are effective. Dimon highlighted the benefits of infrastructure spending and its bipartisan support, though he noted that some Americans in rural and inner-city areas might not feel the positive impacts of the economy.