Goldman Sachs Exchanges Tariffs: What’s ahead and why it matters
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Feb 13, 2025 Alec Phillips, Goldman Sachs' chief political economist, teams up with Kamakshya Trivedi, head of Global Foreign Exchange and Emerging Markets Strategy, to dissect the current tariff landscape. They explore whether we're on the brink of a global trade war and its implications for markets and economies. The duo discusses how rapidly implemented tariffs could affect inflation, economic growth, and investor strategies. They also shed light on the interconnectedness of trade policies, and the uncertainty surrounding future negotiations. Brace for insights that matter!
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Tariff Comparison
- The recent tariff announcements are equivalent to Trump's first term trade war.
- However, public perception is that a trade war has been avoided.
Market Reaction
- Markets have not fully priced in the tariff impact as seen in dollar strengthening and euro weakening.
- The market impact will likely increase the longer tariffs remain, especially concerning Chinese retaliation.
Reciprocal Tariff
- The reciprocal tariff might temporarily replace a universal tariff but doesn't eliminate the risk.
- Additional tariffs are still possible, particularly if Congress seeks budgetary savings.