Tariffs are the hot topic of the day, as U.S. President Donald Trump has already imposed new tariffs and threatens to impose more on major U.S. trading partners like China, Canada and Mexico.
Find Out: Trump Isn’t Ruling Out a Recession This Year — What Could That Mean for Your Wallet?
Read Next: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
Many U.S. companies have already raised prices in anticipation of paying higher costs to import the goods they use to produce the many products that Americans buy regularly. Others are threatening to raise prices when those tariff costs hit. Worse, countries like China are retaliating with their own tariffs or outright refusing to purchase some goods from the U.S.
These effective trade wars are causing a great deal of concern among corporations, economists and the American public. In fact, JP Morgan CEO Jamie Dimon recently told Fox Business that if the tariffs remain high and retaliatory tariffs from other countries don’t change, not only is a U.S. recession likely, it’s also “the best-case scenario.”
What does this mean for the economy and your wallet?
Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?
Recession Is Likely
According to CNN, the CEOs of major retailers like Walmart, Target and Home Depot recently met with Trump warning him that his tariffs could lead to product shortages and worse if nothing is done to roll back some of the steeper tariffs.
Trump responded in a cabinet meeting by suggesting, “Maybe the children will have two dolls instead of thirty.” When pressed by a reporter from NBC News to say if this meant he was admitting that his tariffs will cause some prices to go up, Trump would not commit to an answer.
If nothing is done to change the path the U.S. is on, the trade war, high inflation and a wobbling stock market paint “a dire picture” that some fear could push the U.S. economy “to the brink of full-blown crisis,” CNN reported.
The best-case scenario might be a recession, which can mean higher unemployment rates, lower stock market returns and a shrinking gross domestic product (GDP) for the country as a whole. Dimon said he’s seeing changes in consumer confidence and business sentiment, with people spending less and cutting back, which can be early signs of recession.
Be Aware: 4 Surprising Things That Could Impact Your Wallet If a Recession Hits
Stagflation Is Worst-Case
The worst-case scenario of the trade wars is stagflation. Stagflation occurs when inflation keeps climbing but economic growth does not, putting people in tough financial spots. It can see people relying more on credit, significantly having to scale back on not just leisure and extra, but basics and more.
Dimon has faith, however, in the American economy long term, calling it the “strongest economy in the world” but added that getting these “trade issues” handled would go a long way toward relieving some of the march toward recession or worse.
For Americans, it’s a good idea to prepare as though either of these outcomes are happening, which means cutting back on spending, beefing up an emergency fund and dialing in your budgeting to make sure you’re not missing some expenses.
More From GOBankingRates
5 Luxury Cars That Will Have Massive Price Drops in Spring 2025
4 Things You Should Do if You Want To Retire Early
7 Wealth-Building Shortcuts Proven To Add $1K to Your Wallet This Month
5 Things You Must Do When Your Savings Reach $50,000
Sources
Fox Business, “Mornings With Maria”
This article originally appeared on GOBankingRates.com: JPMorgan CEO Says a Mild Recession Is the ‘Best-Case Scenario’ Right Now — Here’s Why
