The executive director of Goldman Sachs, David Solomon, warned that the chances of a recession in the United States have increased after Donald Trump’s tariffs and that the escalating trade war means “material risks” for the US and for global economic growth, reported The Guardian.
The Wall Street chief cautioned that growing uncertainties over the effects of American tariffs could mean problems for companies and consumers and could throw the economy into chaos.
“We are entering the second quarter with an economic environment radically different from the one at the beginning of the year,” Solomon told analysts.
“The possibility of a recession has increased, and we have increasingly visible signs that economic activity is slowing down globally,” he added.
Solomon also stated that the increasing uncertainty is making it difficult for Goldman Sachs clients to make important business decisions – “This uncertainty about how we will move forward and fears about the effects of an escalating trade war have created a material risk for the US economy and the global economy.”
The warning from the Goldman chief comes despite Trump’s announcement of a “temporary” suspension of tariffs. In addition, the administration has backed down on tariffs for electronic devices produced in China.
Solomon says he is “encouraged by the recent actions of the administration to pursue a more gradual political process that allows negotiations with many countries,” but warned that markets will continue to be volatile, given that we do not know how American trade policy will evolve.