CoinDesk reports:
JPMorgan Chase has issued a warning regarding the economic impact of the presidential election.
In a recent interview with Bloomberg, JPMorgan Chase’s Chief Global Strategist, David Kelly, discussed former President Trump’s interest in raising import tariffs to lower income taxes.
Kelly suggested that if Trump were to defeat Biden, a significant tariff increase could be in store, with the former president proposing it as a cure for stagnation.
“I do think what happened in the debate meaningfully increases the likelihood of a Republican sweep in November… Now, if they sweep, if you believe Donald Trump, you get higher tariffs, and tariffs are a panacea for stagnation. Tariffs slow economic growth and push up inflation,” Kelly stated.
He expressed concerns that the economy is already fragile and policy shocks could trigger a recession, citing Trump’s immigration policies as another potential negative catalyst.
“If we take him at his word on immigration, it would stop because of the deportation of undocumented or illegal immigrants. But I’m not sure we should take him at his word. I think history suggests it would be foolish to do so. But still, you have to think about it. I mean, some policy shocks could absolutely cause a recession,” Kelly added.
Kelly also highlighted uncertainty about the future of Trump’s 2017 tax cuts on the economy.
“The 2017 tax cuts, if Joe Biden is re-elected, some of those tax cuts will extend beyond 2025, but not all of them. If Donald Trump is elected, I expect the whole thing to go away. If you add to that the growth and debt that the Congressional Budget Office is already considering, debt as a percentage of GDP will rise from 122% to around 135% by the early 2030s, so if we extend all these tax cuts, you could have more debt, which means higher long-term interest rates,” Kelly explained.
Kelly did not specifically discuss his economic outlook for Biden’s second term.
Back in April, JPMorgan Chase CEO Jamie Dimon expressed belief that Biden’s current economic policies are “partially effective.”
“When you spend this money, you’re going to have growth. We need some of it, like some industrial policies. I think infrastructure is great. It’s a result of bipartisan cooperation,” Dimon said.
“I think some of the American public’s view on [Biden’s infrastructure spending] is, what do they get out of it? If you go to rural America or inner cities, I’m not sure they feel particularly inspired by this kind of economy,” he added.
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