JPMorgan CEO warns of the risks of an "isolated America First" approach

In JPMorgan Chase CEO Jamie Dimon’s view, the Trump administration’s hardline stance on foreign policy and trade is tightening ties between the United States and its traditional allies. However, he has made it clear that he still has confidence in the long-term potential of the U.S. economy and is optimistic about the development of artificial intelligence.

On April 6, local time, the head of the largest bank in the United States issued another warning again regarding the U.S. economy and foreign policy.

Against the backdrop of the ongoing escalation of conflicts in the Middle East, sharp swings in energy prices, and strained relations across the Atlantic, Jamie Dimon, CEO of JPMorgan Chase, called in his annual letter to shareholders on the White House to strengthen economic cooperation with allies while sticking to “America First,” and to prevent “truly adverse consequences” from occurring to the global economic system.

Annual letter to shareholders

Specifically, there is only one core point in Dimon’s shareholders’ letter—the United States should stick to the “America First principle, but not isolation.” This phrasing both responds to the current policy direction and also forms the basic framework of his external strategy.

In Dimon’s view, the Trump administration’s hardline stance on foreign policy and trade is tightening relations between the United States and its traditional allies.

Starting from the structure of the global economy, he emphasized the importance of economic ties among allies, and warned of the risk of the fragmentation of the system: “The economic weakening of the world’s democracies, or the fragmentation of their economic bonds, could lead to truly adverse consequences.”

Dimon believes that once this trend continues, some countries may be forced to reselect their dependencies, thereby changing the global economic and political landscape.

On trade matters, Dimon gave a relatively cautious assessment: “Tariffs do ‘bring everyone to the negotiating table,’ and allow us to begin correcting some of the bad trade practices of the past.”

But he immediately pointed out that, viewed from a longer-term and more macro perspective, the United States’ external economic policy should not serve only unilateral interests, and should take global development into account as well.

Regarding the current U.S.-Israel-Iran conflict, Dimon pointed out that its significance has already gone beyond economics itself. “The outcome of conflicts among great powers is more important than the financial or economic impacts they may bring.”

He believes that security threats such as Iran must not be ignored. “They must be addressed in an appropriate way.”

In addition, Dimon also focused on the transmission mechanisms through which geopolitical conflicts feed into inflation and markets.

At present, the military actions launched by the United States and Israel against Iran have entered their sixth week. The situation in the Middle East remains tense, and energy markets as well as the global financial system are facing shocks. Before the shareholders’ letter was released, Trump also publicly urged countries to “get oil by force,” further heightening concerns across the international community.

Under geopolitical shocks, oil prices have continued to rise, and some economists have even warned that if the situation further deteriorates, oil prices could break through $170 per barrel, thereby triggering the risk of a global recession.

Based on this, Dimon judges that the main risks in the future will not be inflation falling slowly, but rather the possibility that it could rise again.

In his view, the Iran conflict may continue to push up oil and commodity prices, and layered on top of the effects of supply chain restructuring, inflation will become even more stubborn—“ultimately keeping interest rates higher than what the market currently expects.”

Dimon further pointed out that this inflation pressure will directly affect pricing in financial markets. In the short term, high asset prices can boost confidence, but once the macro environment changes, it will amplify market volatility.

Dimon also warned that the energy shocks of the 1970s and 1980s led to severe recessions. Although the U.S. economy has greater resilience today, similar shocks should not be underestimated.

After analyzing external shocks, Dimon shifted his perspective to within the financial system itself, noting that potential risks are accumulating, especially in emerging areas such as private credit.

He said plainly that in an economic downturn cycle, “most types of high-risk credit will face shocks greater than expected, because underwriting standards at many lending institutions have already deteriorated.” At the same time, private credit funds are gradually expanding to retail investors, but related transparency and industry norms are still insufficient.

Under this logic, Dimon also raised questions about the behavior of the private equity industry: when the stock market is at a high level, the industry has not made sufficient use of the window to push companies to list. This means that once the market turns, risks may be concentrated and exposed.

Although the entire letter is full of warnings about risks, in the concluding portion Dimon still tries to provide a longer-cycle perspective in order to balance short-term uncertainty.

He stated clearly that he remains confident in the long-term potential of the U.S. economy. “I still believe in the existence of the American Dream.”

Meanwhile, he takes a positive view of the development of artificial intelligence, believing it will bring far-reaching impacts in healthcare, materials science, and safety, and may change the way people work and the structure of the population.