The recent turmoil in global financial markets triggered by a series of U.S. tariff announcements appears to be just the beginning of a volatile year.

An annual survey released by JPMorgan on Wednesday indicates that global traders are already bracing for market turbulence in 2025, with tariffs and inflation expected to be the most significant factors influencing global markets this year.

According to the bank, 51% of its 4,233 respondents believe inflation and tariffs could be the dominant market drivers this year, a sharp increase from 27% last year.

Geopolitical factors follow closely, with about 18% of respondents identifying them as the most significant potential market driver this year.

Additionally, approximately 7% of traders view a potential economic recession as the biggest market influence this year, down from 18% last year.

Many market participants believe U.S. President Donald Trump's tariff policies will lead to inflation.

Trump's tariff actions have already shaken markets. Last Saturday, he announced a 25% tariff on imports from Mexico and Canada and a 10% tariff on Chinese goods, causing major U.S. stock indices to drop on Monday. However, stocks rebounded the next day after Trump delayed tariffs on Mexico and Canada.

At the beginning of the week, we saw traders engaging in significantly more activity, attempting to rebalance their portfolios due to movements of 1 to 2 percent in individual currencies such as the Canadian dollar, the Mexican peso, and the offshore Chinese yuan, said Chi Nzelu, Global Head of Fixed Income, Foreign Exchange, and Commodities Electronic Trading at JPMorgan.

Volatility Remains the Greatest Challenge

When asked about the biggest challenge in 2025, traders most frequently cited volatility, a concern that also topped the list for 2024.

In the latest survey, 41% of respondents identified volatility as the greatest challenge this year, up from 28% in the 2024 survey.

What distinguishes this year is the somewhat unexpected timing of volatility. Unlike in the past, when volatility was tied to scheduled events like elections or nonfarm payroll data, we're seeing more sudden fluctuations in response to news headlines around the administration's plans, leading to knee-jerk reactions in the marketplace, said Eddie Wen, Global Head of Digital Markets at JPMorgan.