Jamie Dimon warns that U.S. investors are showing ‘extraordinary amount of complacency’

Jamie Dimon, chief executive officer of JPMorgan Chase, spoke in Paris, France, on May 15, 2025. (Cyril Marcilhacy/Bloomberg/Getty Images via CNN Newsource)

JPMorgan Chase CEO Jamie Dimon says the full effects of tariffs have yet to be felt and that markets are exhibiting an “extraordinary amount of complacency” in the face of those and other risks.

“When I’ve seen all these things adding up that are on the fringes of extreme, I don’t think we can predict the outcome, and I think the chance of inflation going up and stagflation is a little bit higher than other people think,” Dimon said during his company’s annual investor day on Monday. “There are too many things out there, and I think you’re going to see the effect.”

“Even at these low levels, if they stay where they are today, [those are] pretty extreme tariffs. And you also don’t know how every country is going to respond,” he said. And trading partners are responding by cutting deals with other countries, he added.

In addition, Dimon said the U.S. cannot quickly resort to domestically produced goods for those imports, adding that it takes three to four years, at minimum, to build a manufacturing plant.

On April 2, what Donald Trump called “Liberation Day,” the U.S. president imposed expansive new tariffs on trade partners, only to partially walk them back a week later. The reprieve was supposed to last 90 days to allow countries to negotiate with the administration.

Trump officials have said around 100 countries have offered to negotiate deals, setting a tremendously difficult task before U.S. trade negotiators to race against the clock to make new commitments.

Last week, the U.S. and China agreed to drastically roll back tariffs on each other’s goods for an initial 90-day period, in a surprise breakthrough. However, tariffs of at least 30 per cent on the vast majority of products from China are still challenging for small American business as well as retail giants.

Potential credit risks

Dimon said he believes that the odds of stagflation — an economic circumstance of high inflation coupled with stagnant growth or, worse, a recession — are likely twice that of what others have projected.

In that event, he said, U.S. credit losses would rise, not to the extent they did during the financial crisis 17 years ago, but worse than expected.

“I think there have been 15 years of pretty happy-go-lucky credit, a lot of new credit players, different covenants, different leverage ratios, the leverage on top of leverage, things like that,” he said. “So, I think I would expect that credit would be worse than people think of in every recession.”

On May 16, Moody’s downgraded America’s debt from its previously perfect AAA credit rating. It was the last of the three major credit rating agencies to strip US Treasuries of their flawless reputation. Explaining its rationale for lowering its credit rating on the United States for the first time since 1917, Moody’s cited ballooning U.S. debt levels and Washington’s intransigence over budget deficit solutions.

U.S. stocks ended Monday slightly higher after initially falling. The Dow was up by 137 points, or 0.3 per cent. The broader S&P 500 rose by 0.09 per cent and the tech-heavy Nasdaq was 0.02 per cent higher.

Investors sold off U.S. Treasuries. The benchmark 10-year yield, which trades in opposite direction to its price, rose near 4.5 per cent, and the 30-year yield was just under 5 per cent after initially crossing that threshold earlier in the day. The U.S. dollar tumbled 0.6 per cent against a basket of currencies. Meanwhile, gold, a traditional safe haven, rose 1.5 per cent to $3,232 a troy ounce.

Investors in American assets have been on a roller coaster ride this year. Initial excitement over Trump’s business-friendly and tax-cut policies sent stocks surging to a record high in mid-February. But that fervor soon gave way to extreme fear over Trump’s trade policy, sending investors pouring out of American assets in what market observers called the “sell America” trade.

By Alicia Wallace, CNN