Trump Tariffs a Lose-Lose Game, JPMorgan: Tactically Bearish on US Stocks

TradingKey - US President Donald Trump's tariff measures are continuously putting pressure on the US economy and the US stock market. J.P. Morgan has shifted its outlook on US stocks to a tactical bearish stance and warned Wall Street to reevaluate the target price of the S&P 500 index for 2025.

On March 4th, the US's tariff measures against Canada and Mexico were officially implemented, and Canada and Mexico also plan to take retaliatory measures. Under the threat of tariffs, the S&P 500 index dropped by 1.92%, erasing all the gains since the US presidential election in 2024.

Andrew Tyler, the head of global market intelligence at J.P. Morgan, said that tariffs will put pressure on both domestic and foreign economies, and US stocks will decline further.

Tyler said that the escalating trade tensions may lead to a significant decline in the expected GDP of the United States, and the earnings revisions will also decline, which may prompt Wall Street to adjust the year-end forecasts for S&P 500 index.

According to Bloomberg, the expected earnings growth for the first quarter of this year has already dropped from 11% to 7.1%. The economic forecasting model of the Federal Reserve Bank of Atlanta shows that the GDP growth rate of the United States in Q1 of 2025 has sharply decreased from a positive 2.33% to a negative 2.825%, which is the worst GDP forecast since the COVID-19 pandemic in 2020.

Some analysts believe that Trump's tariff war may be more of a negotiation strategy rather than a long-lasting trade war. But even so, investors will still choose to sell their stocks first and then think about it.