JPMorgan warns tariffs could shave GDP, lift inflation to post-war highs in scale<\/p>\n
JP Morgan says US tariffs are likely to deliver a meaningful hit to both economic growth and inflation, as Wall Street economists brace for the bulk of the impact to filter through over coming months.<\/p>\n
\u201cTariffs could subtract 1% from GDP and add 1\u20131.5% to inflation, some of which has already occurred,\u201d said Michael Feroli, chief US economist at JPMorgan. He cautioned that this year\u2019s tariff increases are \u201cwell larger than anything in the post-war US experience,\u201d leaving considerable uncertainty over how much of the higher costs will be passed on to consumers.<\/p>\n
JPMorgan expects the GDP impact to come mainly via weaker consumption, which accounts for about two-thirds of US output, and estimates the drag will be \u201ca bit under 1%\u201d in the second half of the year. The bank\u2019s warning comes as other forecasters note that pre-tariff inventories are now running down, effective tariff rates have climbed to around 18% from 3% at the start of the year, and companies are showing less willingness to absorb higher costs.<\/p>\n
While inflation is not expected to surge out of control, most economists see monthly core price gains in the 0.3%\u20130.5% range, enough to push the Fed\u2019s preferred gauge into the low- to mid-3% area. <\/p>\n
JPMorgan\u2019s call comes alongside broader market worries over the Aug. 29 expiry of de minimis tariff exceptions for imports under $800, a change that could push up prices for retail goods in particular.<\/p>\n
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