As President Donald Trump unleashes a salvo of tariffs on nations around the globe, the trading desk at JPMorgan Chase & Co. is bracing for U.S. equities to extend losses as levies weigh on growth at home and overseas.

Escalating trade tensions are likely to see expectations crater for U.S. gross domestic product and earnings revisions to move materially lower, according to Andrew Tyler, the firm’s head of global market intelligence. That will prompt Wall Street to revisit year-end forecasts for the S&P 500 Index, he said.

“With this in mind, we are changing our view to tactically bearish,” Tyler told clients in a note early Tuesday.

So far, his caution is warranted: Already, first-quarter earnings growth estimates have been revised down to 7.1 per cent from 11 per cent when the latest reporting cycle began, according to Bloomberg Intelligence data. Meanwhile, the Federal Reserve Bank of Atlanta’s latest GDPNow forecast, while an imperfect predictor, is pointing to the US economy shrinking.

The reversal in the trading desk’s long-held bullish view comes amid a more than $3 trillion wipeout in US equities since Trump was elected to the White House in November. Just as quickly as optimism around the potential for market-friendly policies like tax cuts and deregulation drove stocks to fresh records after his win, tariff threats and implementations have seen the market sink.

The US president delivered on his threat of 25 per cent tariffs on Canada and Mexico, while doubling his levies on China to 20 per cent. Meanwhile, 25 per cent tariffs on steel and aluminum imports are due to take effect next week.

Given the swift escalation in rhetoric and no clear pathway to negotiation, Tyler’s team projects levies of this magnitude could jettison Canada and Mexico into a recession, while driving down expectations for economic growth in the US.

The S&P 500 was down 0.6 per cent mid-afternoon Tuesday after sliding as much as 2 per cent and approaching its 200-day moving average. The move deepens losses after stocks notched their worst day of 2025 so far on Monday.

Wall Street has turned firmly risk off, with across-the-board losses in segments ranging from risky small-capitalization shares to the American technology giants that have been a bulwark of the stock market’s furious run over the past two years. The Russell 2000 Index has shed nearly 6 per cent this year, while a flight from the so-called Magnificent Seven stocks has sent a gauge of the cohort into a correction.

Tyler has been correctly bullish across most of the S&P 500’s rally over the past two years, even breaking with JPMorgan research strategists last year to call for new highs as they out on gains. He warned in December that US stocks would be challenged early into 2025 as tariff increases cloud the economic outlook.

“Given the uncertainty, positioning, and potential for a negative feedback loop to push people to using the recession playbook, we think the bearish position makes the most sense,” he told clients.

--With assistance from Jessica Menton and Esha Dey.

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