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According to a recent report from JPMorgan, the new U.S. tariffs could have significant repercussions for the American economy. The bank projects that these tariffs may reduce U.S. GDP by as much as 1% while simultaneously pushing inflation higher by up to 1.5%.
This year’s tariff hikes represent the largest increase since World War II, with the effective tariff rate rising to nearly 18%. With the expiration of tariff exemptions on imports under $800, consumer goods prices are expected to climb further.
JPMorgan has warned that both consumers and businesses may struggle to absorb these additional costs, raising the risk of stagflation. Meanwhile, monthly inflation has remained within the 0.3% to 0.5% range, suggesting that the Fed’s preferred inflation gauge could rise toward 3% to 3.5%.
As U.S. tariffs have surged to their highest levels in decades, revenues from these duties hit a record $28 billion in July. According to estimates by the Tax Foundation, tariff revenues could total about $2.2 trillion by the end of this decade. However, this is also expected to trim GDP by around 0.9%.
Research conducted by Yale University indicates that tariff policies could reduce annual household income by approximately $2,400, since part of these tariff costs are passed on to consumers by companies.
At the same time, Berkshire Hathaway, led by Warren Buffett, has made notable adjustments to its investment portfolio:
• It purchased 6.6 million shares of steelmaker Nucor.
• It added 5 million shares of healthcare insurer UnitedHealth.
• It fully divested its holdings in T-Mobile US.
• It trimmed its stake in Apple by 6.7%, reducing its position to 280 million shares.
Meanwhile, Goldman Sachs reiterated its outlook that the Federal Reserve will cut interest rates three times before the end of 2025. The projected reductions include three 25-basis-point cuts in September, October, and December. Additionally, two further cuts are expected in 2026, bringing the terminal rate down to the 3%–3.25% range. Markets have already increased their bets on a September rate cut. Recent weakness in inflation and employment data has paved the way for such accommodative policy measures.
Federal Reserve Chair Jerome Powell is scheduled to deliver a speech at the Jackson Hole Symposium on August 22, 2025—an event that has become an unofficial policy-setting platform. Analysts at Morgan Stanley expect Powell will attempt to temper market expectations for a 50-basis-point cut in September. Given the political pressures and mixed economic signals, Powell may only endorse a 25-basis-point cut, or potentially push back against easing altogether.
Any of these outcomes could disappoint markets, especially if Powell fails to deliver clear guidance. His speech may therefore play a decisive role in shaping U.S. monetary policy for the remainder of the year and could drive heightened volatility across markets.
Although this week’s economic calendar features several important housing and manufacturing reports, the spotlight will remain firmly on the Fed. On Tuesday, July housing starts and building permits data will be released. Wednesday brings the FOMC’s July meeting minutes, speeches from key Fed officials Waller and Bostic, and the official kickoff of the annual Jackson Hole Symposium.
On Thursday, markets will digest a packed set of data, including the Philadelphia Fed manufacturing index, weekly jobless claims, the preliminary August S&P Global PMI, and July existing home sales.
The highlight of the week will be Friday, when all eyes turn to Jerome Powell. His annual Jackson Hole speech is expected to provide fresh clues about the Fed’s policy trajectory—guidance that could strongly influence market direction in the weeks ahead.
