by Calculated Risk on 4/09/2025 02:00:00 PM

Just minutes after Goldman Sachs put out a note forecasting a recession, Mr. Trump lowered all tariffs to 10% (except China).

First, from Goldman Sachs economists:

Moving to a Recession Baseline We now expect the US’s effective tariff rate to rise by at least 20pp and are forecasting a recession with a 12-month probability of 65%. We think the White House is unlikely to quickly reverse most of the new tariffs, but our probability of recession would decline if it does.

We now forecast GDP growth of -1% this year on a Q4/Q4 basis (or +0.7% on an annual average basis) and a 1.5pp increase in the unemployment rate to 5.7%. This would be less severe than most past US recessions, in part because we do not see major financial imbalances that need to unwind, private sector balance sheets remain strong, and we see some room for trade deals to eventually lower tariff rates somewhat.
emphasis added

And just minutes later from CNBC: Trump temporarily drops tariffs to 10% for most countries, hits China harder with 125%

President Donald Trump on Wednesday dropped tariffs under his new trade plan to 10% on imports from most countries, as he announced a 90-day pause for stiffer, so-called reciprocal tariffs that took effect this week.

Trump also said in a social media post that he was raising the tariffs imposed on imports from China to 125% “effective immediately” due to the “lack of respect that China has shown to the World’s Markets.”

It is impossible to forecast with rapidly changing policy.

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