Investing.com -- JPMorgan analysts expect further tariff actions or threats in the months ahead following President Donald Trump’s recent trade moves.
The firm noted that while tariffs on Canada and Mexico were temporarily postponed, the administration proceeded with a 10% levy on Chinese imports, signaling that trade tensions remain a key market risk.
“Another delay seems likely,” JPMorgan wrote regarding the Canada and Mexico tariffs but added that the postponement is unlikely to last indefinitely.
Meanwhile, the 10% China tariff is “not the end of that story”, with the firm predicting higher duties by the third quarter. The upcoming April 1 report on trade practices could serve as a catalyst for more significant trade actions, JPMorgan warned.
On Sunday, Trump said he will announce reciprocal tariffs this week. In addition, he said he would put a 25% blanket tariff on steel and aluminum imports.
The uncertainty surrounding trade policy has the potential to adversely affect U.S. economic growth, according to JPMorgan, though they state it is not yet adjusting its 2025 growth forecast.
“The economy is entering this bout of trade uncertainty on solid footing, and the actual outcome of some of the proposed tariffs is far from certain,” the firm noted. However, JPMorgan cautioned that uncertainty alone could weigh on corporate investment decisions, posing a risk to capital expenditures.
In the broader economy, the labor market remains strong, with January payrolls rising 143,000 and the unemployment rate falling to 4.0%, its lowest since May 2024. Wage growth also accelerated, with average hourly earnings climbing 0.5% month-over-month.
Looking ahead, JPMorgan is watching for inflation data and retail sales figures next week, forecasting a 0.2% monthly rise in core CPI. While weather conditions likely distorted employment data, JPMorgan believes the Federal Reserve will remain on hold for now, given the overall economic resilience.