What will rapidly shifting tariff policies ultimately mean for the global economy and markets?
I'm Allison Nathan, and this is Goldman Sachs Exchanges.
Today, I'm joined again by Jan Hotzius, head of Goldman Sachs Research and the firm's chief economist,
and Dominic Wilson, senior advisor in the global markets research group.
Jan Dom, it's great to have you back on Exchanges.
Thank you.
Thanks.
Jan, it's been a week for the ages, and so much has happened since we last sat down in mid-February.
At that time, you believed that tailwinds in the economy were more likely to trump tariff headwinds, but we, of course,
since have gotten what can only be described as a seismic shift in tariff policy from the Trump administration that companies and investors are now grappling with.
So first, catch us up on the implications of those shifts for your economic outlook.
Are we facing recession at this point?
Yeah, I mean, if we go back two or three months,
we thought coming into 2025, that tailwinds would probably trump tariffs.
That was the title of our outlook,
and that was when we thought tariffs would rise by maybe four percentage points or so
if you take the average U.S. tariff rate.
Now, it's much higher than that, and we now think that tariffs will trump the tailwinds,
and we have a much more cautious view on the U.S. economic growth outlook.
Tariffs basically weigh on growth via three main channels.