Goldman Sachs Raises U.S. Tariff Forecast Amid Trade Tensions

According to PANews, Goldman Sachs has significantly increased its forecast for U.S. tariffs in 2025, warning that escalating trade tensions could severely impact economic growth, inflation, and employment. The investment bank now anticipates the average U.S. tariff rate to rise by 15 percentage points, up from the previous baseline of 10 percentage points. This adjustment is primarily due to expectations that U.S. President Donald Trump will announce comprehensive 'reciprocal tariffs' on April 2, imposing an average 15% tariff on all U.S. trade partners, with the actual impact expected to increase by 9 percentage points. Goldman Sachs has also revised its year-end core PCE inflation forecast for 2025, raising it by 0.5 percentage points to 3.5%, citing the impact of rising import costs on inflation. The bank expects GDP growth in the fourth quarter to slow to 1.0%, a 0.5 percentage point decrease from previous estimates, and forecasts the unemployment rate to climb to 4.5% by the end of the year. The probability of a U.S. economic recession within the next 12 months has been increased to 35%, attributed to weakened consumer and business sentiment and indications that policymakers may be more willing to endure short-term economic pain to achieve broader policy objectives. With real income growth already slowing, the economy may be entering a more vulnerable phase, where sentiment and policy risks pose greater challenges than in recent years. Additionally, Goldman Sachs now expects the Federal Reserve to cut interest rates in July, September, and November.