Global financial giant JP Morgan has warned that the US could be in recession by the end of 2025. President Donald Trump’s recent “reciprocal tariff” policy implementation is the main reason for this apprehension. The Trump administration has announced imposing heavy tariffs on countries with trade deficits with the US, including India.
JP Morgan’s chief US economist, Michael Feroli, wrote in a note released on Friday that these tariffs will put pressure on the US GDP, which will affect economic activities. He also said the unemployment rate could rise to 5.3% due to the recession.
Federal Reserve Also Worried
US Federal Reserve Chairman Jerome Powell has also expressed concern. He said that tariffs could negatively impact the economy more negatively than before. Powell said at a business journalism conference, “The tariff increase is much bigger than expected. This will increase inflation and slow down the growth rate.”
Shock To India, 26% Tariff Imposed
Under the new policy, a 10% tariff has been imposed on all imports from April 5. After this, from April 9, special and higher tariffs were imposed on those countries with the highest trade deficit with the US, India being one of them. India’s exports will now be charged a hefty duty of 26%.
How Much Will It Affect Indian Trade?
However, brokerage firm Jefferies believes these tariffs will have a limited impact on India’s total exports. A report says that these tariff hikes do not directly affect India’s major export sectors – such as IT services, pharma and automobiles.
Jefferies said, “The 26 percent tariff on India looks comparatively reasonable. But the real concern is the weakness of the US economy, which can become a big threat to the Indian IT and export sector.”
It Will Affect The Global Economy
The aggressive trade policy of the Trump administration has created a wave of concern in the global markets. Companies have now become cautious about a possible recession and fall in demand. America’s policy can greatly impact the domestic level, the global supply chain, and exports.
America’s new tariff policy will pressure countries like India, but the real threat is the American recession, which can affect the whole world’s economy. In the coming times, India will also have to bring flexibility in its export strategy to limit the impact of the global recession.
