Risk of US recession at 45% – Goldman Sachs

Goldman Sachs has raised the odds of a US recession, warning that President Donald Trump’s sweeping new tariffs are tightening financial conditions and weighing on investment.

In a research note titled ‘US Daily: Countdown to Recession’ distributed on Monday, Goldman increased the probability of a downturn in the country’s economy in the next 12 months to 45%, up from 35% the week prior. It also slashed its 2025 growth forecast for the US economy from 1.0% to 0.5%.

The revision follows Trump’s April 2 announcement of a minimum 10% tariff on all imports and “reciprocal” duties of 11% to 50% targeting dozens of nations with what he called unfair trade imbalances. The EU is set to be hit with a 20% tariff, and China with 34% when the hikes take effect on April 9. Beijing has already announced mirror tariffs on US goods, while other countries condemned the move and vowed countermeasures.

“Financial conditions tightened more aggressively than we had expected in response to the White House’s announcement of its ‘reciprocal’ tariff and the Chinese government’s announcement of its retaliatory tariffs,” Goldman analysts said in the note, explaining the revision. They added that “a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty” following Trump’s tariff announcements will “likely depress capital spending by more than we had previously assumed.”

The bank said its projections assume the US might roll back some tariffs following talks with trade partners this week. However, “if most of the April 9 tariffs do take effect… we expect to change our forecast to a recession,” the note warned.

Other analysts have issued similar alerts, and a number of investment banks raised their recession risk forecasts last week. JPMorgan put the odds of a US and global recession at 60%, calling the “disruptive” US tariff policies “the biggest risk to the global outlook all year.”

Billionaire investor Bill Ackman echoed the warning in a post on X on Sunday, calling the tariffs an “economic nuclear war” that could “destroy confidence in our country as a trading partner, as a place to do business, and as a market to invest capital.”

“We are heading for a self-induced, economic nuclear winter, and we should start hunkering down,” he said.

Trump, however, defended the tariffs aboard Air Force One on Sunday.

“Sometimes you have to take medicine to fix something,” he said, pledging to “solve the deficit problem that we have with China, with the EU, and other nations.”