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Goldman Sachs has issued a sharp warning, stating that President Trump's proposed reciprocal tariffs could severely impact the U.S. economy. Trump is expected to announce a sweeping global tariff package on April 2, dubbed "Liberation Day," which could significantly intensify inflationary pressures and recession risks.

Jan Hatzius, Chief Economist at Goldman Sachs, projected that the new tariffs would push the average U.S. tariff rate up by 15 percentage points this year. In response, Goldman raised its year-end core Personal Consumption Expenditures (PCE) inflation forecast by 0.5 percentage points to 3.5%.

More concerning is the sharp increase in recession risk. Goldman Sachs lowered its 2025 U.S. real GDP growth forecast from 1.9% to 1.5%, factoring in slower economic growth and deteriorating consumer and business sentiment. Additionally, it raised the probability of a U.S. recession within the next 12 months from 20% to 35%.

The financial market is already reacting. Last Friday, the Dow Jones Industrial Average fell 716 points (-1.7%), while the S&P 500 and Nasdaq Composite dropped by about 2% and 2.7%, respectively. The S&P 500 is now down 5% year-to-date, putting it on track for its worst quarter since September 2022.

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