JPMorgan: US taxes - ready to shake markets; investors are not prepared

Markets are underestimating the potential impact of new tariffs and are relying on illusions about the so-called "protections" offered by Trump and the Federal Reserve, say JPMorgan financial group specialists in the guide released yesterday and titled "Tactical Considerations on Tariffs", taken up yesterday by the Zerohedge website and the Danish publication Okonomisk Ugebrev. In a global context marked by persistent inflation, economic slowdown and geopolitical uncertainties, Trump's trade tariffs could act as a trigger for a new round of financial turbulence, claims the cited source, who launches a call for caution and strategy: it is time for investors to recalibrate their expectations.

A central message of the JPMorgan report is that investors are not ready for a reality in which Trump assumes greater risks and the Fed does not automatically intervene at the first signs of economic tension.

"The market is overly confident in the protection offered by Trump and the Fed. None of it is guaranteed, and big tech companies may no longer be the defensive havens they once were," says Andrew Tyler, head of JPMorgan's market strategy team.

According to financial giant JPMorgan, the tariff war that begins today is just the beginning of a new cycle of trade tensions that could last until June. A four-phase path is expected: announcement - retaliation - escalation - reconciliation.

Therefore, the experts cited claim that today will not be a "clarification event" for the markets, but rather the beginning of a period of intense volatility.

"Neither Trump's nor the Fed's protection is activated in the short term," warns Andrew Tyler, head of JPMorgan's market strategy team, who states that investors are wrong in estimating the so-called "Trump Put" - the belief that Trump will intervene to stop stock market declines. According to JPMorgan, it either does not exist yet or could be placed below the 5,000 level of the S&P 500 index.

The cited source also states that the Fed, constrained by inflation and unemployment, has limited room for maneuver. With an unemployment rate of 4.2% and CPI inflation at 2.8%, the US central bank is far from having justification for intervention - at least until the third quarter. The proposed tariff scenarios range from 10% to 35%, with a direct impact on financial markets, the EUR/USD exchange rate and government bonds.

JPMorgan analysts emphasize that a favorable announcement could include a generalized tariff of only 10%, excluding VAT and with an opening for sectoral negotiations (e.g. steel, automobiles, sparkling wines, chips). In such a scenario, the S&P 500 index could rise by 2-2.5%.

On the other hand, a tariff of 25% or more, including taxes on shipping vessels or trade bans (e.g. chips to China), would lead to stock market declines of 1.5-3% and could trigger a global inflationary spiral, reminiscent of the tensions during the COVID period.

"The biggest risk is the application of tariffs on container ships produced in China, which could return shipping costs to pandemic levels and fuel global inflation again," the document published by JPMorgan shows.

The cited source also shows that the countries considered "safe havens" are Australia, Japan and the UK, and China is in an uncertain position. Domestically, the "Energy" and "Utilities" sectors are considered safe bets. In contrast, companies in the high-risk TMT sector and the low-income consumer discretionary segment could be most exposed to aggressive selling.

In the FICC (Fixed Income, Currencies, Commodities) area, JPMorgan favors credit over stocks, and recommends long positions on gold, oil and natural gas.