US President Donald Trump has softened his stance on new tariffs set to be announced this week. Goldman Sachs economists have raised their recession forecast from 20% to 35%, citing lower growth and declining confidence.
Trump had previously downplayed the impact of tariffs, but advisers are now considering duties up to 20% on almost all US trading partners. The President wants to impose import taxes on goods from countries with a trade deficit.
Industry experts warn that higher tariffs could lead to increased car prices and decreased demand for domestic products. However, Trump believes it will prompt Americans to buy domestically made cars.
The stock market reacted relatively well to the recent auto tariff announcement, but analysts expect new duties this week to be hawkish. Chris Grisanti, chief market strategist at MAI Capital Management, notes that the US is “making it up as we go along” in its trade policies, lacking experience in a protectionist world.
Goldman Sachs’ recession forecast is based on their lower growth baseline and sharp decline in household and business confidence. The economists project higher U.S. tariffs this year, potentially increasing to 9 percentage points by the end of 2025 if exclusions are made.
Source: https://finance.yahoo.com/news/goldman-sachs-raises-recession-odds-030200970.html