There was a brief glimmer of hope for equity futures this morning, when amid the market rout, JPM CEO Jamie Dimon urged a quick resolution to the uncertainties sparked by Trump’s tariffs and warned against a potentially “disastrous” fragmentation of America’s long-term economic alliances.
“The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse,” Dimon wrote in his annual shareholder letter. In the near term, “we are likely to see inflationary outcomes, not only on imported goods but on domestic prices, as input costs rise and demand increases on domestic products.”
While Dimon cited a raft of lingering questions around the new policy, including potential retaliatory actions by other countries, the impact on investments and capital flows, and the possible effect on the US dollar, he conceded that there are "of course" some legitimate reasons for the action, and that he hopes “the long-term effect will have some positive benefits” for the US.
And how can he not: after all, as Bessent said over the weekend, the US market and economy had been cruising ever higher on the artificial sugar rush of ever higher debt, which would one day end in a cataclysm and far worse than the current market selloff, which is why until now everyone was only talking about fixing the problem - Trump is the first one to actually do something about it. And sure, it will be extremely painful, and it remains to be seen if Trump can even hold the course.
Dimon's letter marks Dimon’s first public commentary on the measures since they were announced. Days after Trump won the US presidential election last year, Dimon said the future president’s tariff threats would “get people to the table” and that he hoped it would be “done wisely.”
Dimon refrained from mentioning Trump directly in the letter. The CEO, 69, has run JPMorgan for nearly 20 years, building it into the largest US bank and becoming the industry’s elder statesman along the way. His annual letters are wide-ranging and closely followed, and this year’s missive stretches to nearly 60 pages, including footnotes.
JPMorgan, which is set to report first-quarter earnings this week, notched the highest annual profit in the history of American banking in 2024 — besting its own record from the prior year.
In addition to addressing tariffs, Dimon wrote about America’s economic alliances more broadly. The US derives strength from its military and economic ties, and maintaining these relationships is essential to avoid the kind of weakening and fragmentation its adversaries would seize upon, he wrote.
Dimon warned against a “false sense of security” that oppressive nations won’t use their military and economic powers to advance their goals, particularly against perceived weak or disorganized Western democracies.
The CEO called for reforms that fortify international systems and institutions like NATO, the United Nations and the International Monetary Fund. He urged European leaders to make economic reforms and boost military spending to help strengthen ties. As for the “complex relationship” between the US and China, the latter would be “better off” forming partnerships with a strong Western world than with nations like Russia and Iran, he wrote.
“America First is fine, as long as it doesn’t end up being America alone,” Dimon wrote. He added that America’s global leadership role is being challenged not just by other nations but also from within the country by its “polarized electorate.”
And as expected, the CEO weighed in on the state of the economy, noting it was already weakening when he began writing his letter — which was before Trump announced his tariff plans. Dimon reiterated his concerns about persistent inflation thanks to the high fiscal deficit, ongoing wars, the need for infrastructure investment in addition to the recasting of global trade and tariffs. How these things play out will impact interest rates, he said.
“The slower the growth, the lower the interest rates, and the higher the inflation, the higher the interest rates,” he said.
Other highlights from the letter, courtesy of Bloomberg:
- On JPMorgan’s excess capital: “After reading the first section of this letter about the state of the world and the many risks facing the global economy, we hope you can see why we also believe that now is a good time to retain lots of extra capital and liquidity.”
- As he has done in the past, Dimon called for an elimination of the US debt ceiling. He wrote that it is “essentially a ‘weapon of mass destruction’ that can be misused by politicians who don’t understand the damage it can do.”
- In his letter last year, Dimon defended the bank’s diversity, equity and inclusion policies but said that the firm would comply with evolving laws. This year, he wrote: “While we have modified our approach to certain corporate responsibilities to conform to new guidance, we remain committed to reaching out to all communities in an effort to create a stronger, more inclusive economy.”
- Dimon also took aim at bureaucracy, complacency and the “BS” which he said kills companies and invited staff to send him an email highlighting “bureaucratic stuff we do”. In February, Dimon made some candid remarks about inefficiency and remote work at an internal townhall event.
