The forecast has been revised in a note titled ‘Countdown to Recession,’ following a “strong tightening of financial conditions, a boycott by foreign consumers, and a continued rise in political uncertainty.”
The estimate had previously been increased from 20% to 35% at the beginning of last week; however, the rates announced by Donald Trump were higher than expected, triggering a wave of sales in global markets and a fall in international stock exchanges, leading to a revision of the forecast.
Trump’s tariff plan, which has kept markets on edge over recent weeks, involves a global tariff of 10%, with higher rates in other countries and blocks.
Among the tariffs announced by Trump are 20% for European imports, 34% for Chinese imports, and 26% for India.
The minimum global tariff of 10% came into effect on Saturday, and what Trump terms as “reciprocal,” which adds to that rate, will come into effect on April 9.
Goldman analysts anticipated that the White House would initially announce a more aggressive tariff and later decrease it.
Additionally, Goldman Sachs has lowered the US economic growth forecasts for 2025 from 1.5% to 1.3%.
Since Trump announced his tariff plan, major investment banks have increased their forecasts for the risk of recession in the US: JPMorgan places that probability at 60%, S&P Global at 30-35%, and HSBC at 40%.
Similarly, Goldman Sachs expects the US Federal Reserve (Fed) to reduce interest rates by 25 basis points each, in three consecutive meetings starting in June.
The Fed’s chairman, Jerome Powell, acknowledged last week that the new tariffs are likely to accelerate inflation and slow economic growth, but he emphasized that the central bank’s focus will be on keeping price increases temporary.
“Our obligation is […] to ensure that a one-time increase in the price level does not become a persistent inflation problem,” Powell stated.
