President Trump’s wave of tariffs threatens to deliver each short-term financial ache, together with decrease progress, and long-term harm to America’s standing and commerce relationships all over the world, the chief government of Wall Avenue’s largest financial institution warned on Monday.

“The current tariffs will doubtless improve inflation and are inflicting many to contemplate a higher likelihood of a recession,” Jamie Dimon, JPMorgan Chase’s chief government, wrote in his annual letter to shareholders.

The warning by Mr. Dimon, one in all Wall Avenue’s most influential leaders, echoes the rising nervousness amongst company chiefs about how the tariffs will play out. Even those that had initially professed help for Mr. Trump’s commerce plans have gotten more and more nervous concerning the penalties.

Even earlier than Mr. Trump’s tariff announcement final week, the U.S. financial system had been exhibiting indicators of pressure after years of wholesome efficiency, Mr. Dimon wrote. Inflation was already a fear, Mr. Dimon stated, pointing to a yawning fiscal deficit and the necessity for extra infrastructure spending. And inventory valuations stay nicely above historic averages, — even after the current market sell-off.

The potential penalties of the commerce battle might make issues worse, the letter stated. These embrace different international locations’ efforts to battle again — as China has completed by imposing 34 p.c counter-levies — and a potential erosion of confidence amongst customers and buyers. Mr. Dimon additionally warned concerning the weakening of the American greenback’s function as the worldwide reserve forex.

“If America, for no matter motive, turns into a less-attractive funding vacation spot, the U.S. greenback and the financial system might undergo if foreigners offered their U.S. property,” he wrote.

JPMorgan’s personal economists have more and more been saying {that a} recession is extra doubtless this 12 months, although Mr. Dimon didn’t personally take a place on these odds in his shareholder letter.

Whereas Mr. Dimon asserted that JPMorgan itself was robust sufficient to face up to the shocks that the levies posed — its merchants have profited from earlier whipsaws within the markets — the worldwide financial system will not be so lucky. “It’s not notably good for the capital markets,” Mr. Dimon wrote of the tariff-linked volatility.

For now, Mr. Dimon wrote that he hoped for a speedy decision to the commerce battles. “The faster this challenge is resolved, the higher as a result of among the unfavorable results improve cumulatively over time and could be laborious to reverse,” he wrote.

The longer-term fear, Mr. Dimon stated, is that Mr. Trump’s battle might shred decades-old alliances that cemented the USA’ primacy within the world order. The JPMorgan chief wrote that he was nervous that America’s buying and selling companions would possibly search out offers with the likes of China, Iran or Russia in response to the tariffs.

“America First is okay,” Mr. Dimon wrote, referring to Mr. Trump’s description of his insurance policies — “so long as it doesn’t find yourself being America alone.”