Goldman Sachs Warns of Economic Slowdown Under Potential Trump Policies
Goldman Sachs analysts are expressing concerns that a potential return of Donald Trump to the presidency could result in slower economic growth if he implements his proposed policies.
The financial firm highlighted that Trump’s plans, which include tightening immigration laws and imposing new tariffs on Chinese imports, could diminish U.S. GDP growth by up to half a percentage point in the latter half of 2025.
Economic Impact of Tariffs and Immigration Restrictions
According to Goldman Sachs, the economic impact of Trump’s policies could be largely negative, with the adverse effects of tariffs and stricter immigration policies outweighing any potential fiscal benefits.
“We estimate that whether Trump wins with a sweep or under a divided government, the detrimental effect of tariffs and stricter immigration policies would outweigh the positive fiscal stimulus,” the analysts wrote in a report released on Tuesday.
The report further suggests that a Trump presidency would likely lead to the imposition of higher tariffs on auto imports from key trading partners such as China, Mexico, and the European Union, a move that could drive up core inflation.
Goldman’s More Optimistic Outlook for Harris
In contrast, Goldman Sachs presents a more optimistic economic outlook under Vice President Kamala Harris, particularly if Democrats control Congress. They argue that fiscal spending initiatives and tax credits under Harris’s administration would “more than offset” the possible negative impacts on investment due to a higher corporate tax rate.
If Congress remains divided under a Harris presidency, Goldman expects that policy changes would be minimal, resulting in a neutral effect on GDP growth.
The analysts also project that job growth under Harris would exceed that under Trump, with an increase of 10,000 jobs per month compared to a Trump administration, and up to 30,000 more jobs if Republicans control both Congress and the presidency.
Joseph Costello, a spokesperson for the Harris-Walz campaign, underscored Vice President Harris’s commitment to promoting economic growth.
“Vice President Harris has a positive vision for strengthening the economy by supporting the middle class, cutting taxes, lowering costs for families and small businesses, and creating opportunities for all Americans,” Costello said. “On the economy, the choice this November is clear.”
