JPMorgan CEO Jamie Dimon’s U-turn on tariffs: from “get over it” to “one large additional straw on the camel’s back”

In his massive 57-page letter to shareholders, JPMorgan CEO Jamie Dimon is singing a different tune on tariffs from less than three months ago.

Speaking in Davos at the World Economic Forum in January, Dimon said of trade levies: “If it’s a little inflationary, but it’s good for national security, so be it. I mean, get over it.”

Since that remark, JPMorgan shares are down 20% through Friday’s close, while the KBW Bank Index is down 24%.

“The recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession,” he writes.

The “many” includes economists at his bank, who now see a 60% chance of a US recession by year end, citing “disruptive US policies.”

Dimon, in detail:

Whatever you think of the legitimate reasons for the newly announced tariffs – and, of course, there are some – or the long-term effect, good or bad, there are likely to be important short-term effects. As for the short-term, we are likely to see inflationary outcomes, not only on imported goods but on domestic prices, as input costs rise and demand increases on domestic products. How this plays out on different products will partially depend on their substitutability and price elasticity. Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.

There are many uncertainties surrounding the new tariff policy: the potential retaliatory actions, including on services, by other countries, the effect on confidence, the impact on investments and capital flows, the effect on corporate profits and the possible effect on the U.S. dollar. The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse. In the short run, I see this as one large additional straw on the camel’s back.