The US-China trade war escalated in April after US President Donald Trump announced tariffs on April 2.
However, after tensions eased following talks between the US and China over the weekend, Goldman Sachs updated its forecast.
At this point, Goldman Sachs has increased its 2025 growth forecast for the US economy by 1% from 0.5 points, citing the US-China trade war and recent developmental tranquility.
We reduced the chances of a 12-month recession to 35%.
The bank also revised its expectations for a Fed rate cut and postponed expectations for interest rate cuts until December rather than July.
At this point, Goldman Sachs said it expects a total of three interest rate cuts from the Fed in 2025 and 2026. Instead of July, I estimated one of these in December, and the remaining two in March and June next year. The bank had previously forecast three interest rate cuts this year.
As is known, the US and China agreed to cut tariffs for 90 days on Monday. Therefore, the US reduced tariffs on Chinese goods from 145% to 30%, while China reduced tariffs on products imported from the US from 125% to 10%.
*This is not investment advice.
