US bank J.P. Morgan expects the „America First“ policy of the incoming President Donald Trump, with higher tariffs, less immigration and lower corporate taxes, as well as deregulation, to turn the USA into a global growth engine in 2025.

„The US economy is expected to grow by 2.3% in 2025, which is significantly higher than the eurozone's 0.8%. In this respect, the USA's exceptional position will remain,“ said Joyce Chang, Global Chair of Research at J.P. Morgan, in an interview with Börsen-Zeitung.

On the other hand, uncertainty for companies is increasing. This is because higher tariffs and an immigration ban would increase costs for companies and likely lead to persistent inflation, which would prompt the central bank to keep interest rates at a high level for longer. „The result could be a recession,“ warns Chang. Before joining J.P. Morgan in 1999, she worked for Merrill Lynch and Salomon Brothers. In addition to her position as Chief Analyst at J.P. Morgan, she is committed to promoting transatlantic relations through her work on the Board of Trustees for the German Marshall Fund.

„Many large investors are currently mainly interested in how Trump's second term will play out,“ says Chang, summarising her impressions following the bank's Global Outlook conferences in Europe. „They are hoping that the planned deregulation in the US will drive share prices up further.“ This would be countered by inflation, with interest rates possibly remaining high. However, there are sectors of the equity market that are less sensitive to interest rates, and are recording growth even with higher inflation, particularly in the area of AI.

By contrast, the growth forecast for China is weaker as Trump's new term of office begins – with growth of 3.9% expected for 2025. „The US economy is the only one supported by consumers. This is its exceptional position, which makes it an outlier among the major economies. And this is also partly due to its large oil reserves,“ said Chang. Consumers in the USA have more money to spend. However, the upturn has so far only paid off for owners of assets such as shares.

According to Chang, Trump's second term in office will have four geopolitical effects on the markets: US government bond yields will fluctuate in a wider range. Capital will flow out of China. Europe will be forced to adopt a new business model. And commodities will be used as leverage in conflicts.

There are also several important differences in Trump's second term of office compared to his first. „China is now a bigger trading partner for the rest of the world than the USA. Regionalisation is increasing. For example, trade between China and Vietnam is growing particularly strongly,“ Chang notes. There is also a strong reshoring of semiconductor production in view of the tensions between China and Taiwan.

J.P. Morgan also warns of an emerging greentech conflict: „What started as a dispute over technology companies is now evolving to include green technologies. China has a monopoly on certain critical minerals that are crucial to the green transition, such as gallium, which makes the global transition to a sustainable economy heavily dependent on China,“ warns Chang.

China is taking a very long-term view in this area, and has more leverage, since investments in green technology are now twice as large as those in oil. „This is unstoppable in the long term,“ Chang believes. This is likely to result in a further decoupling of China and the Western economies.