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2025-04-20T18:14:24Z
- JPMorgan published new research laying out its base case for where Trump ends up with tariffs.
- Under this scenario, the effective tariff rate would land in the 10%-to-20% range.
- The firm lays out adjustments investors can make in response to the new tariff-heavy environment.
JPMorgan expects President Donald Trump’s tariff blitz to yield “some deals” between the US and its trade partners, but says tax rates will still multiply in size.
In new research, the global investment strategy team at JPMorgan Wealth Management outlined its base case for Trump’s tariffs. Under the scenario, the firm says the effective tax rate would be between 10% and 20%, up markedly from 2% at the start of the year.
This “represents a meaningful increase in import duties but lands within Wall Street estimates pre-‘Liberation Day,'” the firm wrote.
Trump has touted the protectionist pivot as a forceful negotiating tactic to elicit better trade deals. While JPMorgan says this scenario will result in an economic-growth slowdown and increased unemployment and inflation, it does see the US narrowly skirting a full-blown recession.
JPMorgan laid two main recommendations for qualifying investors looking to stay safe and perhaps even capitalize on a more volatile environment:
Structured notes
The firm says structured notes can simultaneously provide defensive exposure to stocks while delivering income through options premiums. This strategy generates income in a volatile environment, albeit at the expense of some upside.
Hedge funds in diversified portfolios
JPMorgan says that volatility will give hedge funds more opportunities to “exploit market mispricings and relative value plays across asset classes.” The firm also seems them offering diversification and hedged downside during declines.