Equity Research

TARIFFS IN FOCUS

China: US tariffs on China jump to 125%; Lowering real GDP growth forecasts

On April 9th, President Trump announced a further increase in the tariff rate on imports from China to 125%, following the Chinese government's increase of tariffs on US goods to 84%. Although additional tariff increases are likely to have a diminishing marginal impact, the substantial rise in US tariffs on China is expected to significantly weigh on the Chinese economy and labor market. We anticipate the Chinese government will further intensify policy easing, projecting 60bp of policy rate cuts (vs. 40bp previously) and a 4.1pp expansion in our estimate of the “augmented fiscal deficit” this year (14.5% of GDP, up from 10.4% in 2024). We are revising our real GDP growth forecasts for 2025 and 2026 downward to 4.0% and 3.5%, respectively, from our previous projections of 4.5% and 4.0%.

 Key forecast changes

Source: Goldman Sachs Global Investment Research

10 April 2025 | Research | Economics - Andrew Tilton and others

Global Markets Comment: Too Early for the "All Clear" (Wilson/Chang)

Yesterday's rally sharply reversed the downgrade to the market's growth pricing since April 2. Substantial relief was warranted, and our estimates now suggest that markets have effectively moved to price something close to our baseline forecast. But that suggests there is little discount for what we still believe is a 45% risk of recession over the next 12 months, leaving markets vulnerable to any sign that recession may be coming.

10 April 2025 | Research | Economics - Dominic Wilson and others

Global Markets Daily: Lowdown on the risk of another drawdown - assessing further equity downside risk (Mueller-Glissmann/Ferrario)

Global equities have experienced significant volatility, with MSCI World and S&P 500 seeing a large drawdown and a rebound following a 90-day tariff pause announced by President Trump yesterday. The equity drawdown has been among the sharpest in the last century, partially due to strong performance leading up to the tariff announcement. Our equity drawdown risk framework (which combines sentiment, valuations, macro momentum, and the risk regime) has been pointing to high downside risk since January. The probability of a further sell-off recently went above 35%, driven by deteriorating macro momentum, higher policy uncertainty and worsening risk regime metrics.

10 April 2025 | Research | Economics - Christian Mueller-Glissmann, CFA and others

USA: President Trump Announces 90 Day Pause; Reverting to Our Previous Non-Recession Baseline

President Trump has announced a 90 day pause on the additional country-specific portion of the “reciprocal” tariff. This leaves in place all prior tariffs and the 10% minimum portion of the reciprocal tariff, and we continue to expect additional sector-specific tariffs. Together, these tariffs are likely to sum to something close to our previous expectation of a 15pp increase in the effective tariff rate. As a result, we are reverting to our previous non-recession baseline forecast with GDP growth of 0.5% and a 45% probability of recession.

9 April 2025 | Research | Economics - Jan Hatzius and others

The EM Trader: Pricing Trade War and Peace

EM local rates have been able to sustain their rally through a volatile week, despite the sell-off in USTs. But even as the reciprocal tariffs are postponed and some near-term reversals are occurring, we think prohibitive tariffs on China and an increase in policy uncertainty are likely to weigh on global growth pricing moving forward.

10 April 2025 | Research | Economics - Kamakshya Trivedi and others
 

Global Markets Daily: Making Sense of the Moves in Treasury Yields

Amid rising recession risks and the sharp drawdown in risk assets, the breakdown in the typical relationship of lower yields and lower risk assets in these risk-off periods has become increasingly extreme. In today's Daily, we assess the drivers of this relative weakness in Treasuries.

9 April 2025 | Research | Economics - Bill Zu and others
 

WEBCAST REPLAYS
Research Unplugged: Bear Market Anatomy – the path and shape of the bear market
  Tariffs and Markets: Our View from DC and the Trading Floor
Cross Asset Strategy: Risk Appetite Collapse
Global Markets: Trading the Trade Policy Agenda
Research Unplugged: GOAL Asset Allocation: An overview of our core views across assets
 Bond Market & Cross Asset Views

Visit the Trade policy page for more >