As a Result of Tariffs, JPMorgan Slashes Bank Sector Estimates and Downgrades U.S. Bancorp

JPMorgan has become more cautious about the banking sector following the U.S. government's decision to lift tariffs on all imports.

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In a Thursday research note, JPMorgan analyst Vivek Juneja reduced his earnings forecasts for U.S. banks, cautioning that “there is potential for further cuts” due to the tariff changes announced by President Donald Trump on Wednesday.

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While the broader regulatory environment remains favorable under the current administration, Juneja noted that any easing or removal of rules will take time to have a meaningful impact.

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Juneja warned that the new tariff policy is likely to raise concerns about economic stability and exert additional pressure on financial markets. This could have negative consequences for banks, particularly in areas such as investment banking, consumer spending, loan growth, and wealth management.

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“We expect the tariffs announcement will increase concerns about the impact on the economy and pressure markets overall,” he wrote. “Banks would be impacted by these with fallout on investment banking, consumer spending, and loan growth plus wealth management.

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Consumer spending started to slow in Q1, which would impact economic growth, and inflation could rise with tariffs.”

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Among individual banks, Juneja downgraded his rating for Minneapolis-based U.S. Bancorp, shifting it from a neutral stance to underweight. He also lowered his price target from $51 to $43.50, signaling that he expects the stock to see limited upside in the near future. The bank’s stock closed at $43.01 on Wednesday.

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U.S. Bancorp shares have declined by 10% so far this year, though they have remained relatively flat over the past 12 months, excluding the company’s 4.65% dividend.

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Juneja pointed to U.S. Bancorp’s exposure to economic pressures as a key reason for the downgrade, suggesting that the bank may face greater challenges than some of its peers.

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“U.S. Bancorp has a greater share of growth coming from its push into investment banking, a sizable payments business which will be impacted by slower spending, and sizable credit card loans which have higher loss rates versus peers,” he explained.

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"Longer term, this is a good strategy, and USB is undergoing an overdue management change, but the outlook would relatively be tempered near term.”

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While U.S. Bancorp's strategic initiatives could benefit the company over time, JPMorgan’s latest assessment suggests that economic uncertainties and the shifting trade environment may weigh on its performance in the short term.

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