New York
Businesses worldwide and mainstream economists are fretting about higher prices as President Donald Trump unveils his tariff-heavy economic strategy. But Jamie Dimon, CEO of the world’s largest bank, believes there’s perhaps too much worrying and not enough faith in Trump’s plan.
Tariffs are “an economic tool” or “an economic weapon,” depending on how they’re used, said Dimon, head of JPMorgan Chase, in an interview Wednesday with CNBC from Davos, Switzerland, where the World Economic Forum is taking place. “I would put in perspective: If it’s a little inflationary, but it’s good for national security, so be it. I mean, get over it.”
Currently, Trump is threatening a 10% across-the-board tariff on Chinese goods imported to the US and 25% tariffs on Mexican and Canadian goods, come February 1.
However, Dimon said these threats can be used effectively to “bring people to the table” to negotiate more favorable trade terms. He believes the Trump administration is attempting to use them that way.
That could mean the US imposes lower tariffs on Mexico, Canada and China compared to the rates Trump has floated or perhaps no new tariffs at all. “We’re going to find out,” Dimon said.
Trump himself appears to be leaving the door open to negotiation by setting a deadline of February 1 rather than immediately levying these new tariffs, which he previously promised to do on his first day in office. The tariffs he’s discussing now all appear to be tied to fentanyl, which Trump claims are coming to the US from China via Mexico and Canada.
Already, he said he spoke with China’s President Xi Jinping about instituting harsher punishments for people who transport and produce fentanyl in China, Trump said at an Oval Office press conference on Tuesday.
In addition to the tariffs Trump discussed since taking office earlier this week, on the campaign trail he floated a 10% tariff on everything the US imports as well as tariffs as high as 60% on Chinese goods. He also said he would require countries that are part of BRICS a group of major emerging economies, including China and Russia to commit to not creating new currency or face 100% tariffs during his administration.
Many economists, including those from JPMorgan Chase, have predicted that tariffs, combined with the mass deportations Trump has vowed to implement, have the power to spur higher inflation in the US. However, there is some debate amongst economists as to whether tariffs alone will cause a one-time increase in prices or if consumers will grow accustomed to expecting higher prices in the future as a result of tariffs, leading to potentially higher inflation.
The tariffs Trump said may be imminent could make a wide range of goods more expensive for Americans, especially since Mexico, China and Canada are the country’s top three trade partners.
That list includes consumer electronics such as phones, televisions and computers, toys, cars and car parts, gasoline and produce.
For instance, $123 billion of the $246 billion worth of motor vehicles the US imported last year through November came from Mexico, Canada and China. That’s a little over half the value of all cars the US imported.
The auto sector is likely “apoplectic” about the new potential tariffs, said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. US car companies have been able to keep production costs down by hiring lower-wage workers, particularly in Mexico, where much of their production has shifted to in recent years.
But that cost saving will essentially be erased if the potential new tariffs go into effect, she said.
Dimon says he and Musk ‘hugged it out’
Dimon and Tesla CEO Elon Musk have had a rocky relationship since JPMorgan Chase filed a lawsuit against the electric vehicle maker four years ago seeking $162 million over what it alleged was a breach of contract related to Tesla stock warrants.
That came about after Musk posted in 2018 on what was then Twitter, “Am considering taking Tesla private at $420. Funding secured.” That caused shares of Tesla to instantly jump by 10% that day.
In court, Musk testified in 2023 that “JPMorgan hates Tesla, in a nutshell.” JPMorgan has since dropped the lawsuit.
Now Dimon and Musk, who is spearheading Trump’s Department of Government Efficiency, are on better terms, Dimon said.
“Elon and I have hugged it out,” Dimon said on Wednesday. “He came to one of our conferences, he and I had a nice, long chat. We settled some of our differences.”
“The guy is our Einstein,” the Chase CEO added. “I’d like to be helpful to him and his companies as much as we can.”
