JPMorgan Warns 60% Global Recession Risk Amid US Tariff Escalation

JPMorgan has raised its assessment of the global recession risk to 60%, up from the previous 40%. This warning comes as global stock markets continue to experience a sell-off, largely driven by the imposition of tariffs by the United States. The Chief Economist at JPMorgan, Bruce Kasman, has issued a note titled "There will be blood," underscoring the severity of the economic situation.

The tariffs, which have been a central policy of the Trump administration, have sparked a series of retaliatory measures from various countries, including China. China has responded with its own set of tariffs, imposing a 34% levy on all US imports, effective from April 10. This move is seen as a show of defiance and strength, aimed at countering what China views as unilateral bullying by the US. The Chinese government has also indicated that it may impose additional export controls on rare earth minerals, which are crucial for the production of high-tech goods. This escalation in trade tensions has further exacerbated market volatility and economic uncertainty.

The impact of these tariffs is not limited to the US and China. Lesotho, a small southern African kingdom, has also been significantly affected. The US has imposed a 50% reciprocal trade tariff on Lesotho, which risks wiping out nearly half of its exports. Lesotho's trade minister, Mokhethi Shelile, has expressed shock at the policy, noting that the US is a very important market for the country. Lesotho is now scrambling to put together a high-level delegation to engage with the US in an effort to maintain its current market access.

The economic fallout from these tariffs is not confined to individual countries. The UK's leading stock market, the FTSE 100, has experienced steep losses, with banks being particularly hard hit. The FTSE 100 fell by as much as 4.2% before recovering slightly, marking one of its biggest one-day losses in recent years. This sell-off has been attributed to the economic impact of the tariffs and the resulting market uncertainty.

The situation has also drawn attention from international organizations. NATO Secretary General Mark Rutte has been asked about the new US tariffs but has chosen to focus on the alliance's core mission of defending against threats, particularly from Russia. Rutte has avoided commenting on the tariffs, stating that they are not part of NATO's policy and that national politicians should navigate the economic implications.

The escalating trade tensions and the resulting economic uncertainty have led to a significant increase in the risk of a global recession. JPMorgan's warning of a 60% chance of a recession underscores the severity of the situation. The combination of tariffs, retaliatory measures, and market volatility has created an environment of economic anxiety, with analysts and economists closely monitoring the developments. The situation remains fluid, with the potential for further escalation and economic fallout.