Jamie Dimon warns tariffs will raise prices, slow growth
Summary
JPMorgan CEO’s annual letter says he hopes for long-term benefits, but that many uncertainties linger.Jamie Dimon said he is concerned about how President Trump’s new tariffs will affect America’s long-term economic alliances, which he said have been key to the country’s “extraordinary standing in world affairs."
In his annual letter to shareholders, the JPMorgan Chase chief executive said the tariffs are likely to drive up inflation on imported goods and domestic prices, with input costs rising.
“Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth," Dimon wrote in the letter that touched on issues including the tax code, military security, healthcare costs and the country’s education system.
Wall Street has been reeling since Trump unveiled his sweeping tariffs on Wednesday, with the S&P 500 plunging 9.1% last week and the Nasdaq falling 10% and into a bear market. Bank stocks were among those that were slammed, with investors fearing a recession would lead to a pullback in borrowing and dealmaking.
For the past few years, Dimon has been warning about risks to the economy, from the wars in Ukraine and the Middle East, to interest rates and government debt. He has called the global geopolitical situation the most tense since World War II. On Monday, he added the tariffs to that list of simmering issues.
Dimon’s letter said there are many ongoing uncertainties around the tariffs, including retaliatory actions by other countries and the effects on corporate profits and the 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," he wrote.
After negotiations, Dimon said he hoped the long-term effect of the tariffs will bring benefits to the U.S.
Dimon’s tone on tariffs has changed with Trump’s rollout of his tariff plans. In January, he didn’t appear worried about tariffs at the World Economic Forum in Davos. “If it’s a little inflationary, but it’s good for national security, so be it. I mean, get over it," he said in an interview with CNBC.
But by March, Dimon was expressing more concern about the effects of tariffs on companies, noting that “uncertainty is not a good thing" in an interview at a recent retirement summit.
Here’s what else Dimon touched on in his letter:
Taxes
Dimon took aim at tax breaks that he said primarily benefit the wealthy. “These include carried interest, the ability to deduct up to $10,000 of state and local taxes, and too many creative estate tax planning techniques." He said the U.S. tax code should incorporate the “Buffett Rule" so that high-income earners pay a minimum tax on realized income.
“Everyone, including the wealthy, would benefit enormously from the increased growth that would follow if we amended our system the right way," he wrote.
Stock prices
Even with the recent declines, Dimon said stock and debt prices remain high. “Markets still seem to be pricing assets with the assumption that we will continue to have a fairly soft landing. I am not so sure," he wrote.
U.S. deficit
Dimon said America’s economic performance has been driven in part by its enormous government spending, which has led to a huge deficit. “These large deficits are not sustainable—I do not know whether it will cause a real problem in six months or six years—the sooner we deal with it, the better," he wrote.
Management lessons
The longtime CEO also had some advice for leaders, including to treat everyone with respect and to make follow-up lists. “Take care of yourself. If you don’t take care of yourself, it doesn’t work," he added.
Write to Candice Choi at candice.choi@wsj.com
