April 9: President Trump pauses tariff hikes

The Trump administration has made a U-turn on trade policy, pausing higher tariffs for most countries. While the 10% global tariff will remain in place, the scheduled increase in country-specific tariffs has been frozen for 90 days — with the exception of China, where the tariff rate has been increased to 145%. In response to the reprieve, the EU also put its countermeasures on hold in hopes of negotiating a deal.

“In static terms, today’s moves would actually increase the tariff rate. But with Chinese tariffs going to punitive rates, even conservative estimates would suggest that China’s share of imports should shrink dramatically, reducing the increase in total average effective tariffs,” said Michael Feroli, chief U.S. economist at J.P. Morgan.

“Overall, the drag from trade policy is likely to be somewhat less than before, and thus the prospect of a recession is a closer call. However, we still think a contraction in real activity later this year is more likely than not,” Feroli added. 

April 9: Growth forecasts are cut outside of North America

J.P. Morgan Research has noted that its call for a U.S. recession will likely lead to downgrades in growth forecasts outside of North America. Recessions are already expected in Canada and Mexico, and modest downgrades have also been made to growth projections for Europe, China and some emerging economies, primarily in Asia. As a result, global real GDP growth is expected to be 1.4% in the fourth quarter of 2025, down from 2.1% at the start of the year.   

March 27: Auto tariffs could impact growth and inflation

President Trump has announced 25% tariffs on auto and auto parts entering the U.S., which will take effect on April 2. This updated trade policy will likely raise costs for consumers, according to Ryan Brinkman, head of U.S. Autos and Auto Parts at J.P. Morgan. U.S. light vehicle prices could potentially rise by as much as ~11.4% on average under one scenario, should automakers prove successful in passing tariff-related costs along to consumers.

“Under the new scheme, virtually all automakers will face significant pressure to raise prices, making it more likely domestic automakers will be able to effect price increases to better offset tariff costs without the risks of material market share loss,” Brinkman noted.

In response to the auto tariff announcements, J.P. Morgan Research has further revised its growth and inflation forecasts. It now sees a 0.2 percentage point hit to U.S. GDP, which moves its estimate for the year down to 1.3%. PCE price inflation for 2025 is expected to climb to 2.7%, up 0.2 percentage points, while core PCE inflation is forecast to increase 0.3 percentage points to 3.1%.

“The worsening growth and inflation outcomes leave the Fed with a challenging dilemma. Absent labor market deterioration, there is a strong case for rates to be on hold indefinitely. However, the more challenging business environment increases the chances of just such a labor market deterioration,” Feroli said. “We hold our call for cuts in June and September and will revisit after next week’s jobs report.”

March 12: President Trump imposes 25% tariffs on steel and aluminum 

The new administration has imposed 25% tariffs on all steel and aluminum imports to the U.S. This could drive up the prices of various goods ranging from autos to canned drinks.

This harks back to 2018, when President Trump imposed 25% tariffs on US$16 billion of imported steel, and 10% tariffs on US$9 billion of imported aluminum, during his first term. The measures at that time led to increased domestic production but also sparked retaliatory tariffs, raising costs and domestic prices for downstream industries.

“The U.S. relies on imports to meet the bulk of its primary aluminum needs and domestic prices have already been adjusting sharply higher in anticipation of the new tariffs,” Szentivanyi said.

March 7: Reciprocal tariffs could be substantial if foreign taxes are targeted

Reciprocal tariffs involve equalizing the U.S.’s import tariffs with those imposed by its trading partners. Average tariff rates between the U.S. and other advanced economies are relatively low, so reciprocal tariffs would in theory be small. However, the Trump administration is also considering applying these tariffs against a broader range of foreign taxes — such as value-added taxes and digital services taxes — imposed by other countries on U.S. firms.

The economic impact of applying tariffs in this way would be much more significant as the trading partner’s VAT would be added on top of the tariff differential with the U.S. While the rates could be negotiated lower on a country-by-country basis, the shock could still be large in some cases.

“Taken together, reciprocal tariffs levied in this extended way would raise the average U.S. tariff more significantly — by another 12 percentage points to above 20% — and would likely have material consequences for U.S. inflation and growth,” Szentivanyi noted.

February 27: Consumers could face higher prices as a result of tariffs

The impact of tariffs will likely trickle down to the American consumer, who could face higher costs for some imported goods. “At the end of the day, tariffs are a tax on imports. How much this tax raises final consumer prices depends on factors such as the elasticity of demand and the extent of exchange rate movement,” said Murat Tasci, senior U.S. Economist at J.P. Morgan. “However, the tax incidence nearly always falls on domestic sellers and consumers, and not foreign producers.”

In 2018–2019, Chinese exporters did not meaningfully change their prices in response to U.S. tariffs, even though the CNY depreciated in relation to the USD. Although the inflation impact did not appear significant at that time, studies have since shown that there was a nearly one-for-one rise in import prices, much of which was passed onto consumers.

“That said, President Trump’s proposed tariffs are much larger in magnitude and in scope of coverage than the 2018–2019 tariffs, and the inflation backdrop today is materially different,” Tasci noted.