Goldman Sachs declares risk of US recession at 45 percent
(MENAFN) Goldman Sachs has increased the likelihood of a US recession to 45%, up from 35%, following President Donald Trump's announcement of sweeping new tariffs. In a research note released Monday, the bank highlighted that the tariffs are tightening financial conditions and negatively impacting investment. Goldman also downgraded its US economic growth forecast for 2025 from 1.0% to 0.5%.
The revision came after Trump unveiled a minimum 10% tariff on all imports, along with "reciprocal" duties ranging from 11% to 50% on numerous countries, including the EU and China. The tariffs are set to take effect on April 9, with China already responding with mirror tariffs on US goods. The bank noted that the trade measures are exacerbating financial market volatility, raising policy uncertainty, and hurting capital spending more than expected.
Goldman’s analysts indicated that they expect the US to potentially roll back some tariffs after trade talks this week. However, they warned that if the tariffs remain in place, their forecast may shift toward a recession. Other analysts, such as JPMorgan, have also raised their recession forecasts, citing the disruptive effects of Trump’s tariff policies. Investor Bill Ackman warned that the tariffs could lead to a severe economic downturn, which he described as a "self-induced economic nuclear winter."
Despite these warnings, Trump defended his tariff policies, stating that they are necessary to address trade imbalances with China, the EU, and other nations.
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