The US-China Trade War Escalation
The US-China trade war escalated in April after US President Donald Trump announced tariffs on April 2. However, after the tensions eased following the talks between the US and China over the weekend, Goldman Sachs updated its forecasts.
Goldman Sachs Updates Growth Forecast
At this point, Goldman Sachs increased its 2025 growth forecast for the US economy by 0.5 points to 1 percent, citing the calming of the US-China trade war and recent developments. It lowered the 12-month recession probability to 35 percent.
Expectations for Federal Reserve Rate Cuts
The bank also revised its expectations for a Fed rate cut, postponing the rate cut expectation to December instead of July. At this point, Goldman Sachs said it expects a total of three rate cuts from the Fed in 2025 and 2026. It estimated one of these in December instead of July, and the remaining two for March and June of next year. The bank had previously forecast three rate cuts for this year.
Customs Duties Reduction Agreement
As is known, the US and China agreed on Monday to reduce customs duties for 90 days. Accordingly, the US reduced the customs duty on Chinese goods from 145% to 30%, while China reduced the customs duty on products imported from the US from 125% to 10%.
*This is not investment advice.