Wall Street’s biggest banks lined up to warn investors of growing recession risks from the escalating trade war between the U.S. and China.

A global recession could start within nine months if President Donald Trump imposes 25% tariffs on an additional $300 billion of Chinese exports and Beijing retaliates, according to Morgan Stanley. Separately, JPMorgan Chase & Co. said the probability of a U.S. recession in the second half of this year had risen to 40% from 25% a month ago.

“Recent conversations with investors have reinforced the sense that markets are underestimating the impact of trade tensions,” Chetan Ahya, chief economist at Morgan Stanley, wrote in a report. “Investors are generally of the view that the trade dispute could drag on for longer, but they appear to be overlooking its potential impact on the global macro outlook.”

Such warnings may set the tone for financial markets and will inform this week’s gathering in Japan of the Group of 20 finance chiefs. The potential for a marked slowdown in the world economy was underscored Monday by weakening manufacturing gauges across Asia.

Government bonds yields have tumbled this year as investors moved to price in an economic slowdown and central bank easing — and a key recession indicator, the gap between three-month and 10-year Treasury rates, is sending the strongest warning sign sinice 2007. Yet strategists at JPMorgan and Citigroup Inc. see scope for even lower yields.

“Global growth now looks likely to slip below trend for the rest of this year,” JPMorgan Chief Economist Bruce Kasman and colleagues wrote in a report.

Also sounding the alert, economists at Goldman Sachs Group Inc. said they now expect the U.S. to impose 10% tariffs on the remaining $300 billion-worth of imports from China and on all Mexican goods, too. The bank lowered its U.S. second-half growth forecast by about half a percentage point to 2% and said it sees a greater likelihood of interest-rate cuts from the Federal Reserve.

“While it is a close call, the outlook has not yet changed enough for cuts to become our baseline forecast,” Goldman analysts led by Chief Economist Jan Hatzius said in a note.

The rift between the Trump administration and China has escalated as each side blames the other for the breakdown in talks. The trade war is also taking on a global dimension amid simmering tensions between the U.S. and the European Union, while Trump is threatening to impose tariffs on Mexican goods in response to illegal immigration.

Morgan Stanley’s Ahya advised clients that if the conflict continues, growth will suffer as costs increase, customer demand slows, and companies reduce capital spending.

Analysts at Citigroup recommended investors buy U.S. Treasuries, noting the last time the world economy looked as it does now was at the start of 2016 — which was followed by a meaningful slowdown worldwide.

“That episode may provide a useful blueprint for the coming months,” said Mark Schofield, Citigroup’s director of macro strategy. “The U.S. economy has been resilient up to now, however, persistent themes of softening tailwinds in the form of declining fiscal stimulus and strengthening headwinds in the form of trade tensions and China slowdown, are a threat.”

(Updates with factory data in 8th paragraph. An earlier version of this story corrected a sub-headline to show that Morgan Stanley was warning of potential recession.)

This article originally appeared on Bloomberg.

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