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1、TRUMP TARIFFS:MOSTLY TALK,OR BIG ACTION?ISSUE 136|Febr uar y 26,2025|5:35 PM EST%R%Global Macro ResearchInvestors should consider this report as only a single factor in making their investment decision.For Reg AC certification and other important disclosures,see the Disclosure Appendix,or go to Gold

2、man Sachs Group,Inc.Pr esident Tr ump s t ar if f act ions since his inaugur at ion have been not hing shor t of st r iking.While mar ket s have begun t o r eact t o t hese development s,deep t ar if f r isks ar e st ill being under pr iced.Whet her t hat will cont inue t o be t he case lar gely dep

3、ends on if Tr ump t ar if f s end up as most ly t alk,or act ion.Tr ump s f or mer Deput y USTR Jef f Ger r ish believes t he lat t er is mor e likely when it comes t o br oad t ar if f act ion given t he Pr esident s long-held goal of cor r ect ing global t r ade imbalances.And Wiley Rein LLP s Tim

4、 Br ight bill ar gues t hat Tr ump likely has t he legal aut hor it y t o implement such a bold r eshaping of t r ade policy.So,GS Alec Phillips and Joseph Br iggs assess t he economic implicat ions of a r ange of pot ent ial t ar if f s and t he significant uncer t aint y sur r ounding t hem.And GS

5、 Kamakshya Tr ivedi assesses t he mar ket implicat ions,envisioning even mor e Dollar st r engt h,f ur t her declines in US equit ies,and an even flat t er Tr easur y cur ve ahead if Tr ump indeed walks t he walk on bigger and br oad t ar if f s.“I NTERVI EWS WI TH:Jeff Gerrish,f or mer Deput y US T

6、r ade Repr esent at ive f or Asia,Eur ope,t he Middle East,and I ndust r ial Compet it iveness,Par t ner,Schagr in Associat es Timothy C.Brightbill,Co-Chair of t he I nt er nat ional Tr ade pr act ice,Wiley Rein LLP,Adj unct Pr of essor,Geor get own Univer sit y Law Cent er Alec Phillips,Chief US Po

7、lit ical Economist,Goldman Sachs Q&A:EX-US I MPACTS OF TRUMP TARI FFS Sven Jar i St ehn,Alber t o Ramos,Hui Shan,Joseph Br iggs,GS Economics Resear ch UNCERTAI NTY I S THE ONLY CERTAI NTY Joseph Br iggs,GS Global Economics Resear ch TARI FFS&MARKETS:LESSONS LEARNED SO FAR Kamakshya Tr ivedi,GS Mar k

8、et s Resear ch TARI FFS AND COMMODI TY DOMI NANCE Daan St r uyven,GS Commodit y Resear ch WHATS INSIDEofAllison Nathan|allison.nat .AND MORETOP MINDJenny Grimberg|j enny.gr imber The t ar if f s Pr esident Tr ump has announced so f ar t he 10%t ar if f on impor t s f r om China t hat t ook ef f ect

9、on Febr uar y 4 and t he 25%t ar if f s on st eel and aluminum set t o t ake ef f ect on Mar ch 12ar e r oughly equivalent t o all of t he t ar if f hikes f r om t he fir st Tr ump Administ r at ion.-Alec PhillipsEver yone needs t o buckle up,because t he Pr esident is j ust get t ing st ar t ed on

10、t ar if f s and what lies ahead will likely be even mor e unpr edict able t han dur ing his fir st t er m.-Jef f Ger r ishThe t ar if f s announced so f ar ar e aggr essive but ar guably wit hin t he pr esident s aut hor it y.So,while I expect challenges,t he r ecent t ar if f act ions ar e unlikely

11、 t o be halt ed by t he cour t s.-Tim Br ight billAshley Rhodes|ashley.r NoteNote:The following is a redacted version of the original report published February 26,2025 31 pgs.hEl Goldman Sachs Global Investment Research 2 Top of Mind Issue 136 Macro news and views US Japan Latest GS proprietary data

12、points/major changes in views We now expect the Fed to slow the pace of balance sheet runoff in May(vs.June before)as the Jan FOMC meeting minutes indicated a desire to slow the pace of runoff soon.Datapoints/trends were focused on US tariffs;we estimate the tariffs we expect in our baseline will ra

13、ise the effective tariff rate by 4pp,translating into a 0.4pp boost to yoy core PCE that would leave it at 2.5%in Dec,though the tariff-induced rise should drop out after a year.Fed rate cuts,which we still expect in June and December,though we view further cuts this year as a very close call.US net

14、 immigration,which we expect will continue to slow.US consumer confidence,which declined in February.Latest GS proprietary datapoints/major changes in views We raised our 2025 Japan new core CPI forecast to 2.2%yoy(from 2.1%),mainly to reflect sharply rising rice prices.Datapoints/trends were focuse

15、d on BoJ policy;we expect the BoJ to continue hiking rates at a pace of two hikes per year,with the next hike in July,though increased political uncertainty after the upcoming Upper House elections could delay the next hike.Shunto wage negotiations,which we expect to result in a base pay increase ab

16、ove 3%this year.Japans labor shortage,which is expected to worsen ahead,although the continued inflow of foreign workers could keep the aggregate labor force broadly flat.Trump tariff frenzy Estimated impact of tariff increases on the effective tariff rate,pp Japan labor shortage:a foreign worker of

17、fset Japanese labor force,millions of people Source:Goldman Sachs GIR.Source:Ministry of Internal Affairs and Communications,JILPT,GS GIR.Europe Emerging Markets(EM)Latest GS proprietary datapoints/major changes in views We recently raised our 2026/2027 Euro area real GDP forecasts to 1.1%/1.3%(from

18、 1.0%/1.1%)to account for likely higher military spending in Europe.We raised our 2025 UK real GDP growth forecast to 1%yoy(from 0.9%)after stronger-than-expected 4Q24 GDP data.Datapoints/trends were focused on ECB policy;we expect the ECB to continue delivering sequential 25bp rate cuts to a 1.75%t

19、erminal rate in July.Potential Russia-Ukraine war ceasefire,which we think would result in a limited Euro area GDP boost(+0.2%),unless it entails a comprehensive resolution(+0.5%).Latest GS proprietary datapoints/major changes in views No major changes in views.Datapoints/trends were focused on Chin

20、a GDP growth,which we expect to slow to 4.5%this year vs.the“around 5%”target that policymakers will likely set at the upcoming“Two Sessions”,though the downside risks have abated somewhat given more-muted-than-expected US tariffs and DeepSeek-induced AI excitement.China policy rate cuts,which remai

21、n constrained by policymakers FX stability concerns.CEEMEA growth,which faces downside risk from potential US tariffs and Middle East uncertainty,but upside risk from a potential ceasefire in the Russia-Ukraine war.Europe:a(potential)peacetime growth boost Estimated effect of Russia-Ukraine ceasefir

22、e on real GDP,%Chinas AI upside AI boost to Chinas trend real GDP growth,%Note:“Limited ceasefire”scenario entails a de facto resolution to the war over time.“Upside”scenario entails a comprehensive and credible resolution.Source:Haver Analytics,Goldman Sachs GIR.Source:Goldman Sachs GIR.02468101210

23、%ChinaEnd of de minimisexemption on China25%Steel&aluminum10%Critical imports25%EU autosExtra 10%tariffs on ChinaReciprocal tariff25%Mexico25%Canada/10%oil&gasFull EU 25%Global auto 25%60%ChinaUniversal 10%LikelyAnnouncedAdditional Risks586062646668701995200020052010201520202025203020352040Total lab

24、or forceJapanese onlyGS/JILPT estimates-0.6-0.4-0.20.00.20.40.60.81.0LimitedUpsideLimitedUpside Limited UpsideLimitedUpside Limited UpsideEuro areaGermanyFranceItalySpainEnergyConfidenceTradeRebuildingFCIImmigrationTotal0.00.10.20.30.40.50.62024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

25、BaselineFaster adoptionWe provide a brief snapshot on the most important economies for the global markets hEl Goldman Sachs Global Investment Research 3 Top of Mind Issue 136 Tariff action since President Trumps inauguration just over one month ago has been nothing short of striking:the 10%tariff on

26、 imports from China that took effect on February 4 and the 25%tariffs on steel and aluminum set to take effect on March 12 are already roughly equivalent to the entirety of tariff action during the first Trump Administration,and many other tariffs have been announced or proposed but not yet implemen

27、ted.While markets have begun to react to the trade developments,they are still underpricing deep tariff risks.Whether that will remain the case depends largely on whether these tariffsespecially the steep tariffs on Mexico and Canada or,even more importantly,a sweeping reciprocal or universal tariff

28、 that would represent a seismic shift in US trade policyend up as mostly talk,or action.To help answer this question,we speak with Jeff Gerrish,the Presidents former Deputy US Trade Representative for Asia,Europe,the Middle East,and Industrial Competitiveness.Gerrish argues that Trumps current trade

29、 policy goals largely overlap with those of his first term,including using tariffs to gain negotiating leverage,protect national security,and address unfair trade practices and deep trade imbalanceswhich Trump has long bemoaned(see pg.24)though the goals of addressing non-trade issues and raising re

30、venue via tariffs have taken on greater importance.With this in mind,Gerrish argues that the threatened Mexico and Canada tariffs,as well as broad auto tariffs,likely fall into the realm of negotiating tactics and therefore seem likely to be avoided if US trading partners make admittedly still-uncle

31、ar concessions.Steel and aluminum tariffs,however,likely fall on the opposite end of the spectrum,given Trumps deep-seated view that protecting these domestic industries is vital to national security,making implementation quite likely.But most noteworthy is Gerrishs view that President Trumps long-h

32、eld goal of correcting global trading imbalances means that he is“no doubt looking to go bold and broad with respect to tariffs”.Whether Trump ultimately chooses to do so through an expansive reciprocal tariff or a universal tariff is not yet clear,Gerrish says,but he warns that the market should no

33、t interpret the delay in implementing a broader tariff as a lack of resolve to do so.So,Gerrish believes the global trading system is poised for a major shift ahead and advises everyone to“buckle up,because the President is just getting started”.But even if Trump wants to reshape trade policy in suc

34、h bold fashion,can he legally do so?Tim Brightbill,Co-Chair of Wiley Rein LLPs International Trade practice,believes so,noting that the US president has wide-ranging authorities to impose tariffs,with the courts generally upholding such authorities in the past.So,what might be the economic implicati

35、ons of Trumps tariff plans?Alec Phillips,GS Chief US Political Economist,estimates that a base case tariff scenario of an additional 10pp tariff on imports from China,sectoral tariffs covering several critical imports,and tariffs on EU autos would weigh on US growth by only a few tenths of a percent

36、age point while boosting year-over-year US core PCE inflation by roughly 0.4pp.This,he says,would still leave the door open for Fed cuts this yearindeed,we continue to forecast rate cuts in June and Decemberbut would“make a close call even closer”.And he notes that a more extreme tariff scenario wit

37、h larger inflation and growth effects could further complicate the outlook for rate cuts as the Fed would need to weigh potentially higher inflation against a potential growth hit from much tighter financial conditions.GS senior economists Jari Stehn,Alberto Ramos,Hui Shan,and Joseph Briggs then exp

38、lore the implications for the US four largest trading partnersEurope,Mexico,China,and Canadafinding that the inclusion of foreign value-added taxes(VATs)in a reciprocal tariff policy would hit Europes economy particularly hard,US tariffs would likely substantially weigh on growth but be deflationary

39、 rather than inflationary in China,and Mexico and Canada could suffer significant growth hits if the threatened tariffs on them ultimately come to pass.Briggs and the Global Economics team also dive into the broader global impacts of various tariff proposals,finding that a global auto tariff would c

40、reate larger growth headwinds in Korea,Canada,and Mexico while reciprocal tariffs would have the largest incremental growth impact on Vietnam and Hungary relative to our baseline,though tariffs of any nature would have relatively muted impacts on prices outside of the US.But even if Trump ultimately

41、 implements a more benign tariff package than expected,Briggs expects the significant uncertainty around the Presidents trade agenda in and of itself to weigh on global growth,as was the case during the 2018/19 trade war.This is especially important to note as Gerrish sees no end to the uncertainty

42、in sight,arguing that the Trump Administration welcomesrather than eschewssuch uncertainty,which they view as helpful for achieving their goals of bringing back manufacturing and jobs to the US.So,what could this all mean for markets?GS Co-head of Global Commodities Research Daan Struyven argues tha

43、t Trumps pursuit of“US commodity dominance”via the use of tariffs and other policy actions will likely have only limited near-term impacts on commodity markets.And Kamakshya Trivedi,GS Head of Global FX,Rates,and EM Strategy,argues that the still-benign macro backdrop and the relatively moderate tar

44、iffs Phillips assumes in his base case point in the direction of a stronger Dollar and higher equities.But he also notes that,with markets still underpricing deep tariff tail risks,scope exists for a stronger move in the Dollar,US equities to fall further,and the Treasury curve to flatten more signi

45、ficantly if Trump indeed walks the walk on bigger and broader tariffs.Allison Nathan,Editor Email: Tel:212-357-7504 Goldman Sachs&Co.LLC Trump tariffs:mostly talk,or big action?hEl Goldman Sachs Global Investment Research 4 Top of Mind Issue 136 Jeff Gerrish is the former Deputy US Trade Representat

46、ive for Asia,Europe,the Middle East,and Industrial Competitiveness(2018-2020).Currently,he is Partner at Schagrin Associates.Below,he argues that the bulk of President Trumps tariff actions still lie ahead and will likely be even more unpredictable than during his first term.The views stated herein

47、are those of the interviewee and do not necessarily reflect those of Goldman Sachs.Allison Nathan:You played a key role in trade policy during President Trumps first term.What are his goals regarding tariffs/trade policy and to what extent have these goals shifted from his first term?Jeff Gerrish:Mo

48、st of President Trumps current goals with respect to his trade and tariff policies are consistent with his first term.These goals include the use of tariffs to address unfair trade practices and correct significant trade imbalances with other countries,to rebuild the US manufacturing sector and brin

49、g back US manufacturing jobs,to protect national security by reducing strategic vulnerabilities related to the US reliance on imports,and to gain leverage for negotiations with our trading partners.Two of Trumps trade policy goals,however,have taken on greater importance.The first is the use of tari

50、ffs to address non-trade,non-economic foreign policy and geopolitical issues.So far this includes the use of tariffs against Mexico,Canada,and China relating to border security and fentanyl trafficking,as well as the threat of tariffs against Colombia on immigration issues and against Denmark relati

51、ng to Greenland.The second is the use of tariffs to raise revenues to offset some of Trumps proposed tax cuts.Allison Nathan:While Trumps goals vis-vis tariffs seem clear,the plan to achieve them seems less so given the recent back-and-forth on tariff announcements and implementation.Does Trump have

52、 an overarching plan/strategy with regard to his trade agenda?Jeff Gerrish:The idea that Trump is shooting from the hip on trade and tariff policy is a misperception.Even though the Administrations tariff actions may appear erratic or haphazard at times,Trump has a plan and a strategy to achieve his

53、 goals.The Presidents actions since the inauguration are a testament to his willingness to move forward with tough trade action if concessions arent made,just as he did with the China tariffs during his first term.And when he pulls back at the last minute,as he did with the 25%tariffs on Mexico and

54、Canada,its not because he has changed his mind,but because he has secured adequate concessions.If such concessions are not made,its clear hell ultimately move forward with trade action.Allison Nathan:So,are the tariffs on Canada and Mexico just a negotiating tactic then,and,if so,what is Trump aimin

55、g to achieve through these negotiations that would prevent those tariffs from going into effect?Jeff Gerrish:I would say that the 25%tariffs on Mexico and Canada are more likely in the realm of negotiating tactics.While US trade deficits with both countries,but especially Mexico,have risen significa

56、ntly,these tariff actions are clearly more related to border security,which was a defining issue in the election.So,the President feels the need to take strong action quickly out of the gate to better secure our borders,and the use of tariffs has been a way to achieve this.Trump took similar actions

57、 during his first term,when he threatened tariffs on Mexico related to border security issues and ultimately secured actions by Mexico to address his concerns,which enabled him to avoid the actual implementation of tariffs.This experience served as a trial run for the current developments,and I ulti

58、mately expect them to resolve in a similar way.The Canadians and Mexicans appear to be trying to do enough to allow Trump to declare victory without actually having to implement tariffs.That said,the actions Canada and Mexico will need to take to ultimately satisfy the President and avoid tariffs ar

59、e not entirely clear.I assume those objectives are being more clearly set out in the course of ongoing discussions between the US and these countries,but this remains uncertain for now,which leaves the ultimate resolution uncertain as well.Allison Nathan:What about the proposed 25%tariff on US auto

60、imports?Is that also just a negotiating tactic?Jeff Gerrish:I think proposed auto tariffs also likely fall into the camp of a negotiating tactic.Trump used similar tactics very effectively in his first term to increase investment in US auto manufacturing and manufacturing more broadly.So,I can see h

61、im doing the same in this context when it comes to the threat of blanket tariffs on auto imports,as well as renewed USMCA negotiations,where the focus will likely be on keeping as much auto manufacturing as possible in North America,but particularly in the US.To that end,tightening up the rules of o

62、rigin will likely be a key focus of those negotiations.Of course,if the President feels he is not getting the traction and results that hes seeking,he would not hesitate to move forward on tariffs,just as he did in his first term.Allison Nathan:What about the steel and aluminum tariffs?Jeff Gerrish:

63、In contrast to the other tariffs weve been discussing,the President is clearly committed to taking strong action on steel and aluminum.During his first term,Trump recognized the importance of the US steel and aluminum industries to national security and implemented tariffs to stop the flood of impor

64、ts that were severely harming our domestic industries,as evidenced by low capacity utilization and losses.Those tariffs substantially aided our industries,leading to additional investments in domestic capacity,and Trump will almost certainly view such measures as paramount ahead.Although the Section

65、 232 tariffs on steel and aluminum that Trump originally implemented remain in place,numerous exclusions and country exemptions have significantly weakened them,leading to renewed industry losses.So,Trump is committed to putting the bite back into these Interview with Jeff Gerrish hEl Goldman Sachs

66、Global Investment Research 5 Top of Mind Issue 136 measures by removing such exclusions and exemptions and raising the aluminum tariff to match the higher steel tariff.Such actions will likely provoke pushback from downstream industries and their representatives on Capitol Hill,but,right now,the Pre

67、sident is very focused on strengthening the implementation of these tariffs and extending them to derivative products.Allison Nathan:The million-dollar question is whether the President will implement more sweeping tariffs in the form of a reciprocal or universal tariff.Whats your view?Jeff Gerrish:

68、The President is no doubt looking to go bold and broad with respect to tariffs to address the overall problem of the global trade imbalance.Although the US trade deficit with China has declined since the imposition of the Section 301 tariffs during Trumps first term,our trade deficits with many othe

69、r economies have exploded.So,Trump seems committed to taking expansive actions to address this imbalance.Whether he does so through a global baseline tariff,which would be a minimum across-the-board tariff on all products from all countries,or a reciprocal tariff,which would match the tariff rates o

70、ther countries impose on us,remains unclear;Trump spoke about the former quite a lot during the campaign,but the Administration is currently studying the latter.Its also unclear whether reciprocal tariffs would take the place of a global baseline tariff,which they very well might.But both would be a

71、 major,fundamental change to the global trading system.Thats especially the case as a reciprocal tariff would likely attempt to reflect not only the different tariff rates set by countries around the world but also value-added taxes(VATs)and non-tariff barriers,which can be as big of a problem as th

72、e tariffs themselves.Determining tariff levels that reflect tariff and non-tariff barriers,particularly in countries with relatively opaque systems,will be challenging.But I do think the Administration will attempt to do so if they go the reciprocal tariff route.Allison Nathan:The market seemed reli

73、eved that Trumps reciprocal tariffs announcement did not include more direct action.Was the delay more likely another negotiating tactic,or rather an acknowledgement that the Administration will need more time to figure out the correct implementation given the complexity?Jeff Gerrish:Its more likely

74、 the latter.Again,implementing a reciprocal tariff that captures both tariff and non-tariff barriers is exceptionally complicated,and Trump will want the full complement of his trade and economics team in place before he takes this on.Howard Lutnick was recently confirmed as the Commerce Secretary a

75、nd doesnt yet have his full team in place,and Jamieson Greer was just confirmed as the US Trade Representative.These and other teams need to be in place to conduct the necessary analyses and to ensure that the Administration has the legal authority required to implement these tariffs.So,the market s

76、hould not take the delay as a reason to believe that these tariffs wont happen.Allison Nathan:So,it sounds like you think Trump will do something very big on tariffs,but the market doesnt really seem to believe that.Why do you think that is?Jeff Gerrish:Perhaps its because the market doesnt believe

77、that the President will ultimately take such bold action.But thats a miscalculation because Trump,especially with regard to trade and tariffs,tends to do what he says hes going to do,and hawks in his administration will want to take bold action with him.Of course,like his first term,the Administrati

78、on has a range of perspectives on trade.I would put Jamieson Greer,Peter Navarro,and probably Howard Lutnick in the trade hawk camp while Treasury Secretary Scott Bessent and other economic officials are somewhat less hawkish on trade issues.But even Bessent tends to lean more in favor of tariffs th

79、an many past Treasury secretaries.Allison Nathan:With that in mind,where do you think tariffs and trade policy more generally is headed with regard to China?Jeff Gerrish:What the President and some of his trade team may be seeking on the US-China trade front might differ.The trade team seems more in

80、clined to continue strong action and selective decoupling from China using tariffs and other policies given the existential threat they believe China presents due to its investment-and export-led economy and its efforts to use unfair trade practices and industrial policies to dominate strategic indu

81、stries around the world.Trump shares these concerns,but still seems open to doing a deal with China,and with President Xi in particular,as he did successfully during his first term.Whether another deal is possible is a big unknown,but it seems unlikely because China has not complied with the Phase 1

82、 trade agreement and likely wont be willing to make concessions on the issues that will be important for the US in the areas of industrial subsidies,overcapacity,disciplines on state-owned enterprises and many others.But,with Trump,you never know what might be possible.I would also note that China i

83、s not the only country with which Trump may try to pursue a deal;in his recent meeting with Indian Prime Minister Modi,Trump also raised the prospect of a deal with India.Trump is keen on developing his relationships with world leaders like Xi and Modi,and those sorts of relationships can drive acti

84、on in the trade and tariff space.Allison Nathan:Given all weve discussed,are the bulk of tariff actions now most likely behind us,or still ahead?Jeff Gerrish:I am confident that the bulk of tariff actions still lie ahead.Well see what happens with the 25%tariffs on Canada and Mexico in early March.B

85、ut I am most closely watching the outcomes of the comprehensive reviews of several different trade and tariff actions that will be issued on April 1 pursuant to the America First Trade Policy Memo that Trump issued on Inauguration Day,which could lead to a whole host of tariff actions.Everyone needs

86、 to buckle up,because the President is just getting started and what lies ahead will likely be even more unpredictable than during his first term.Allison Nathan:Trump presumably understands that businesses dont like uncertainty,but he seems to be stoking and even embracing it.What do you make of tha

87、t?Jeff Gerrish:The President and his Administration are indeed embracing uncertainty because they can use it to help them achieve their goals.In their view,such uncertainty will help bring back manufacturing and jobs to the US,where the operating climate is more certain.So,I wouldnt expect an end to

88、 uncertainty anytime soon.hEl Goldman Sachs Global Investment Research 6 Top of Mind Issue 136 A chronology of a new era of tariffs hEl Goldman Sachs Global Investment Research 7 Top of Mind Issue 136 Many of the tariff actions so far have targeted the US largest trading partners,including Mexico,Ma

89、inland China,and Canada 2024 US imports by major trade partner,%of GDP with Canada in particular also highly exposed to a critical goods tariff if one materializes as we expect Exports of critical goods to the US,20 largest exporters,$bn Source:US Bureau of Economic Analysis,Goldman Sachs GIR.Source

90、:United Nations Comtrade Database,Goldman Sachs GIR.largely through oil exports,while Europe faces exposure through pharma exports,and Asia through electronics exports Contribution to US imports of key critical import categories,%A global auto tariff also remains a risk,but we think more targeted ta

91、riffs on EU autos are more likely,which would affect only a modest share of US vehicle consumption Where US-consumed vehicles and parts are produced,%Source:United Nations Comtrade Database,Goldman Sachs GIR.Source:US Dept of Commerce,International Trade Administration,GS GIR.The scope of reciprocal

92、 tariffs remains uncertain,and while economies with large tariff differentials account for a small share of US imports,the Administration could consider value-added taxes(VATs),which nearly every economy has,in reciprocal tariff calculations US trading partners by tariff differential scaled by US im

93、port share,%Note:Width of the bars represents share of US imports from each economy;share of US import figures in parentheses.*We assume an average 5%US sales tax.*As a result of the Sec.301 tariffs,US tariffs on Mainland Chinese exports exceed Mainland Chinas tariffs on US exports.Economies with fr

94、ee trade agreements with the US impose no tariff on nearly every import category;for simplicity,we assume no tariff differential.Source:World Bank,OECD,Goldman Sachs GIR.Special thanks to the US and Global Economics Research teams for charts.0%5%10%15%20%Saudi ArabiaAustraliaIsraelBrazilSingaporeMal

95、aysiaSwitzerlandUnited KingdomIndiaTaiwanVietnamSouth KoreaJapanCanadaMainland ChinaMexicoEuropean Union020406080100120140CanadaIrelandChinaMexicoGermanyJapanKoreaSwitzerlandSingaporeIndiaMalaysiaUKNetherlandsItalySaudi ArabiaBrazilBelgiumFranceDenmarkIraqNorth AmericaWestern EuropeAsia PacificCEEME

96、ALatAm0102030405060708090100Mineral fuelsPharmaceuticalsElectrical equipmentOrganic chemicalsIron,steelAluminumMisc.chemicalsArticles of iron/steelPrecious stonesChemicalsCopperNickelOther base metalsZincRubberOresMineralsTinTanning,dyeingSoapsLeadExplosivesNorth AmericaWestern EuropeAsia PacificCEE

97、MEALatAmUSChinaEUCanadaMexicoJapan and South KoreaOther051015202530EU(18.5)Mexico(15.5)Mainland China*(13.4)Canada(12.6)Japan(4.5)Vietnam(4.2)Korea(4)Taiwan(2.7)India(2.7)LatAm FTA(2.5)UK(2.1)Switzerland(1.9)Thailand(1.9)Malaysia(1.6)Singapore(1.3)Brazil(1.3)Indonesia(0.9)Turkey(0.5)South Africa(0.4

98、)Tariff differential accounting for the economys VAT minus US sales tax*Tariff differential(avg.foreign minus US product-level tariff,weighted by US imports from the economy)The who,what,where of US tariffs hEl Goldman Sachs Global Investment Research 8 Top of Mind Issue 136 Alec Phillips is Chief U

99、S Political Economist at Goldman Sachs.Below,he argues that the tariffs so far represent only a fraction of the tariffs that will ultimately be implemented.Allison Nathan:How does the recent trade policy action compare to that of President Trumps first term?Alec Phillips:The tariffs President Trump

100、has announced so farthe 10%tariff on imports from China that took effect on February 4 and the 25%tariffs on steel and aluminum set to take effect on March 12are roughly equivalent to all of the tariff hikes from the first Trump Administration.At that time,the effective tariff rate on goods from Chi

101、na increased by roughly 10pp,and smaller tariffs on steel/aluminum(there were many exceptions to the steel tariffs,and the aluminum tariff was set at 10%rather than 25%).But two big differences exist between that experience and today.First,those tariff increases came over a year after Trump took off

102、iceand the passage of an important tax cutand were spread over a couple of years.Second,during Trumps first term,financial markets treated relatively small tariff increasescompared to the tariffs proposed nowas big news.This time around,despite a similar tariff increase,the market reaction has been

103、much smoother,perhaps because the economic fallout from the prior tariffs proved manageable and because market participants have been anticipating higher tariffs since the election.Allison Nathan:How would you rank the recent trade actions in terms of their potential importance/impact?Alec Phillips:

104、The proposed 25%tariff on Canada and Mexico is probably the most important single tariff action that President Trump has threatened so far,in that it would affect two countries where the US accounts for 75-80%of exports and a meaningful share of GDP,and where US production is more integrated than wi

105、th any other trading partner.It would also represent a substantial departure from existing US policy,as the United States-Mexico-Canada Agreement(USMCA)is by far the US most important free trade agreement.Like the China-focused tariffs and steel and aluminum tariffs,these tariffs are also a throwbac

106、k to the first Trump Administration(Trump threatened Mexico with tariffs over immigration issues in 2019,but not Canada).Similar to that experience,these tariffs dont look likely to take effect and,if they do,they likely would not last very long.The most important proposed tariff action in terms of

107、potential economic impact is the broad-based tariffs Trump has mentioned.A reciprocal tariff might raise the average effective tariff rate by 1-2pp if it only takes tariffs into account,as high-tariff trading partners supply a small share of US imports.However,if a reciprocal policy also accounted f

108、or value-added taxes(VATs),as Trump has said it would,the rise in the US effective tariff rate could top 10pp.And accounting for non-tariff barriers(NTBs)to trade could increase tariffs further.Trump has also talked about sectoral tariffs on several occasions,which would likely target various“critic

109、al imports”like pharmaceuticals,semiconductors,and other electronic components,and possibly the auto sector and oil/gas imports.A tariff on critical imports would probably affect a smaller share of imports than some of the other tariffs mentionedthe categories Trump has mentioned frequently account

110、for imports of around$600bn/year,or around 20%of total imports,but this is still more than imports from China,for example.Allison Nathan:Are the bulk of tariff developments most likely now behind us,or still ahead?Alec Phillips:Weve likely only seen a fraction of the tariffs that will ultimately be

111、implementedwere only about 5 weeks into a four-year term,after all.And the tariffs seem likely to come in stages.The earliest tariffs Trump threatened on Canada and Mexico were likely proposed to create leverage in negotiations on immigration policy and in the upcoming USMCA review.It also seems lik

112、ely that the tariffs Trump has mentioned in a less detailed way related to the EU and other trading partners fall in the same category.A second set of tariffs relate to protecting domestic industry and economic or national security.The main example would be the steel and aluminum tariffs.Sectoral ta

113、riffs more generally fall into this group,as do China-focused tariffs,though in both cases one could argue that they straddle the line between the negotiation and security categories,as we might see negotiated exceptions to sectoral tariffs and Trump might have an eventual deal with China in mind.Th

114、e third category,which Trump has discussed but we have not yet seen,is tariffs that are aimed at rebalancing trade more generally or raising revenue.During the campaign,Trump called for a“universal baseline”tariff of 10-20%,though the reciprocal tariff seems to have supplanted this more recently.Tar

115、iffs in this third category could have the greatest impact,as they would likely apply broadly across trading partners but at somewhat lower levels that make them more credible.So far,Trump seems to be operating mainly in the first and second categories,which are more familiar territory from his firs

116、t term.He has opened the door to the third,but has not gotten there yet.Allison Nathan:So,what does the range of possible outcomes for tariffs look like from here,and what are you assuming in your macro forecasts?Alec Phillips:The most extreme tariff scenario is that Trump simply follows through on

117、what he promised during the presidential campaign:steep tariffs of up to 60%on imports from China,reciprocal tariffs,and a 10-20%baseline tariff.The most benign scenario is that Trump focuses on using tariffs to win other concessions,leading to the opposite outcomea decline in trade barriers over ti

118、me.Neither of these scenarios seem particularly likely,as the hit to growth,inflation,and financial markets might dissuade Trump from the most aggressive approach,while it is unclear what a second trade deal with China,for example,would look like.Interview with Alec Phillips hEl Goldman Sachs Global

119、 Investment Research 9 Top of Mind Issue 136 Were assuming an outcome in the middle:another 10pp tariff on imports from China and sectoral tariffs,which include the upcoming steel and aluminum tariffs,as well as tariffs on EU autos.Trumps proposed reciprocal tariff also appears to be a serious propo

120、sal with a good chance of implementation in some form,but it is far from clear at this point what form it would take so,for now,we dont include it in our assumptions.Allison Nathan:What would be the growth,inflation,and Fed policy impacts under those baseline assumptions?Alec Phillips:The tariffs we

121、 assume would raise the average effective tariff rate by 4-5pp,roughly triple the 1.5pp rise in the first Trump Administration,and modestly higher than the 3pp we assumed soon after the election.As a rough rule of thumb,each 1pp rise in the tariff rate is worth 0.1pp on the core PCE price level,so t

122、hese baseline tariff assumptions would boost core year-over-year inflation by 0.4pp later this year,assuming they are implemented within a few months of each other.The GDP impact would be somewhat smaller.We expect these tariffs would weigh on growth by a few tenths of a point later this year and in

123、 early 2026,although this depends in part on how much financial conditions tighten in response.Equity market reactions to tariff announcement so far this year suggest the reaction could be smaller than in the 2018-2019 experience.But while the more benign reaction might reflect less concern about th

124、e fundamental impact of tariffs,it might also simply suggest that market participants have already discounted some of this(e.g.,China-focused tariffs)and still view others(e.g.,Canada and Mexico tariffs)as a negotiation tactic,even when they are only hours from implementation.Even with the tariff in

125、creases in our baseline,the door is still open for Fed cuts this year,though it would make a close call even closer.In 2018-2019,Fed officials appeared to be more concerned about the hit to growth from tariff hikes than about the rise in prices,and it looks likely that the FOMC would largely look th

126、rough one-time price increases clearly linked to tariffs.That said,the further core inflation is from the Feds target,the more likely it is that the Fed postpones cuts until there is greater certainty.We continue to forecast two rate cuts this year,in June and December,and one more in 2026 to a term

127、inal rate range of 3.5%-3.75%.Allison Nathan:How would the more extreme tariff scenarios impact growth,inflation,and Fed policy?Alec Phillips:The reciprocal tariff,which we dont include in our baseline at this point,would raise the tariff rate by 1-2pp more,though more aggressive versions of such a

128、tariff would go much further.If the postponed tariffs on Mexico and Canada are eventually implemented,they would raise the tariff rate by nearly the same amount as all of the tariffs in our baseline combined,or nearly 6pp.Using the same rule of thumb as before,this would add around another three-qua

129、rters of a point to core PCE inflation,and a further hit to growth by a similar but slightly smaller amount.Fed policy becomes more uncertain in such a scenario.Fed officials would likely still be inclined to look through a one-time price level shift driven by higher tariffs,but core inflation would

130、 be far enough from the Feds target that it could argue for delaying cuts.However,while the hit to financial conditions from tariff announcements thus far has been smaller than expected,that is less likely to be the case in the event of a more extreme tariff scenario that goes well beyond what marke

131、t participants are expecting,and could still allow for additional cuts this year.Allison Nathan:What could the USMCA review and renegotiations in 2026 look like?Are there any other trade deals that we should pay attention to ahead?Alec Phillips:The near-term tariff threat facing Canada and Mexico su

132、ggests that President Trump is apt to push for more substantial changes in the USMCA during the review due by July 2026.Two of the most important issues are likely to be the auto sector,where the first Trump Administration pushed for tighter regional content and labor rules,and treatment of goods ma

133、nufactured by Chinese companies in Mexico.The auto sector,in particular,presents challenges as some Mexican-produced vehicles are imported outside of USMCA rules,paying the standard 2.5%tariff instead,making it hard to tighten rules further while the standard auto tariff remains low.Outside of USMCA

134、,President Trump appears interested in revisiting a deal with China,though it is far from clear at this early stage what might be achievable.Another interesting question will be whether a reciprocal trade policy,if it occurs,would lead to renegotiation of tariffs with some high-tariff trading partne

135、rs.Trump has focused on India in this regard.Allison Nathan:What should investors be watching most closely over the coming weeks and months?Alec Phillips:In the very near term,the main question is how Trump deals with the Canada/Mexico deadline on March 4.We assume that he announces additional conce

136、ssions from the two countries and that tariffs are not implemented at that point.Trump has pushed the deadline multiple times,and the best bet seems to be that he will do so again.The risk is that,to preserve credibility,he imposes the tariffs at least briefly.Also,steel and aluminum tariffs are due

137、 to take effect March 12.It would be surprising if they did not,but it will be worth watching whether the Trump Administration makes exceptions for certain trading partners,which Trump recently ruled out.While trade policy uncertainty has already risen substantially over the last several weeks,it se

138、ems likely to rise even further by early April.The presidential memo on trade policy that Trump signed on January 20 also calls on trade-related agencies(primarily Commerce,Treasury,and USTR)to make recommendations by April 1 to deal with the trade deficit in general,potentially through a“global sup

139、plemental tariff”,unfair trade practices of specific countries,currency policies,reevaluation of free trade agreements including but not limited to USMCA,unfair foreign taxation of US businesses,Chinas compliance with the Phase One trade agreement,an updated investigation on Chinas economic policies

140、 and circumvention of previously imposed tariffs,outbound investment restrictions,and export controls.The same agencies are due to make recommendations regarding a reciprocal tariff around the same time,and President Trump has mentioned that a global auto tariff could also be imposed then.hEl Goldma

141、n Sachs Global Investment Research 10 Top of Mind Issue 136 A long 0%5%10%15%20%1929193419391944194919541959196419691974197919841989199419992004200920141930:SmootHawley Tariff Act:The US levies import tariffson more than 20,000 goods,triggering retaliation abroad and a reduction in trade volumes.The

142、 Trade Expansion Act of 1962 grants the US president significant leverage to negotiate tariff reductions(with the aim of supporting allies,such as the emergent European Economic Community);Section 232 allows for trade restrictions on the basis of national security.1971:President Nixon levies a blank

143、et 10%import surcharge to address perceived Dollar strength,as the US faces its first 20th century trade deficit;the measure is lifted four months later,as G10 nations agree to revalue vs.the USD.1985:G5 officials sign the Plaza Accord to reduce the value of the USD in response to a widening US trad

144、e deficit.1994:NAFTA is signed.2001:China joins the WTO.2002:President Bush imposes tariffs on steel;the measure is rolled back one year later as trading partners threaten to retaliate.For most of the 19th century,the US maintains a largely protectionist trade stanceBegnning in the mid-1930s,the US

145、significantly reduces tariffs while attempting to secure reciprocal market access1980s:PresidentReagan imposes trade restrictions on steel and textiles,among other industries;Japan is pressured to adopt voluntary export restraints on autos.The Reciprocal Trade Agreement Act of 1934 authorizes the US

146、 president to negotiate like-for-like tariff reductions with major trading partners.Beginning in 1989,free-trade agreements(FTAs)proliferate;as multilateral talks stall,US trade negotiations shift toward bilateral and regional trade pacts1947:23 countries including the US sign the General Agreement

147、on Tariffs and Trade(GATT)the primary framework for 20th century trade negotiations.1987:Donald Trump places a full-page ad in major US newspapers calling for a reduction in trade deficits.1995:The World Trade Organization(WTO)is established as a successor to the GATT.2012:The US-Korea FTA(KORUS)is

148、signed.2004:The Australia-US FTA is signed.2013:T-TIP negotiations begin between the US and EU.Trade Act of 1974:The US attempts to reduce non-tariff barriers,while establishing new retaliatory tools(including Section 301);fast track authority for negotiating trade agreements is established.US effec

149、tive tariff rate(customs duties/imports)hEl Goldman Sachs Global Investment Research 11 Top of Mind Issue 136 and short history of US trade policy 0%5%10%15%20%20172018201920202021202220232024US effective tariff rate(customs duties/imports)2017:The US withdraws from the Trans-Pacific Partnership(TPP

150、);the 11 remaining nations sign the deal less than a year later.2018:President Trump announces tariffs on washing machines,solar panels,steel,and aluminum and imposes tariffs on$250bn of Chinese goods.All three countries sign the US-Mexico-Canada Agreement(USMCA),which replaces NAFTA.The Export Cont

151、rol Reform Act becomes law in the US.The Act provides the president with broad authority to control the export of certain technologies.2019:President Trump lifts steel and aluminum tariffs on Canada and Mexico.The US and China ramp up trade war,but ultimately reach Phase One trade deal in December,u

152、nder which the US agrees to significantly modify its Section 301 tariff actions and China commits to substantial additional purchases of US goods and services.2020:President Trump imposes new tariffs on steel and aluminum products;tariffs on Canadian aluminum are later lifted.Trump and China Vice Pr

153、emier Liu He sign the US-China Phase One deal.The US and China subsequently reduce tariffs on each other and grant exemptions.2021:President Trump extends 2018 tariffs on washing machines days before leaving office.President Biden lifts tariffs on some aluminum and steel products from the EU but rei

154、nstates Section 232 tariffs on aluminum from the UAE.2022:President Biden extends Section 201 tariffs on solar panels and cells,but subsequently suspends such tariffs on Southeast Asian countries temporarily.The US eases tariffs on steel from Japan,the UK,and Ukraine.President Biden reinstates hundr

155、eds of product exclusions from the Section 301 tariffs imposed by the Trump Administration.2023:President Biden further raises tariffs on steel and aluminum products from Russia first levied in response to the Russia-Ukraine war.US tariffs on washing machines end.2024:President Biden announces the i

156、mposition of tariffs on Chinese electric vehicles,solar cells,and some steel and aluminum products,with three-year phase-in.Three weeks after his reelection,Trump announces that he will impose an additional 10%tariff on all Chinese imports.Source:US International Trade Commission,US Department of Co

157、mmerce,WTO,Irwin,Douglas A.,“Clashing over Commerce”,Peterson Institute for International Economics,Goldman Sachs GIR.US effective tariff rate(customs duties/imports)hEl Goldman Sachs Global Investment Research 12 Top of Mind Issue 136 Timothy C.Brightbill is Co-Chair of Wiley Rein LLPs Internationa

158、l Trade practice and an Adjunct Professor at Georgetown University Law Center.Below,he discusses the legal authorities that the US president has to impose tariffs and argues that President Trumps recent tariff actions fall within these authorities.The views stated herein are those of the interviewee

159、 and do not necessarily reflect those of Goldman Sachs.Jenny Grimberg:What specific authorities does the US president have to impose tariffs?Tim Brightbill:The president has a wide variety of tools at his disposal to impose tariffs,three of which President Trump has utilized across his two terms.One

160、,the International Emergency Economic Powers Act(IEEPA),which was the basis for Trumps February 1 Executive Order that imposed additional 10%tariffs on China and the 25%tariffs on Canada and Mexico that were ultimately postponed.IEEPA gives the president broad power to regulate commerce during a nat

161、ional emergency,has almost-immediate effects on international trade,and doesnt require an agency investigation to invoke.Two,Section 232 of the Trade Expansion Act,which allows the president to impose tariffs on imported products deemed a threat to national security and was the basis for Trumps orig

162、inal and expanded steel and aluminum tariffs.And three,Section 301 of the US Trade Act of 1974,which the current administration hasnt invoked but was the basis for the 25%tariffs on hundreds of billions of dollars of Chinese goods in 2018 that kicked off the US-China trade war.Section 122 of the sam

163、e 1974 Act,which is the presidents balance-of-payments authority,has never been used by Trump but would allow him to impose an additional 15%tariff on imports for up to 150 days,unless extended by Congress.And Section 338 of the Tariff Act of 1930,which hasnt been used in over 70 years,allows the pr

164、esident to impose tariffs of up to 50%on any country discriminating against US producers.So,President Trump could conceivably use this to impose reciprocal tariffs.Jenny Grimberg:Whether IEEPA can be used to impose tariffs seems to be a matter of debate.Is there historical precedent for such use of

165、IEEPA,and what have the courts had to say in this regard?Tim Brightbill:IEEPA has never before been used to impose tariffs,although both the first Trump Administration and the Biden Administration used IEEPA to sanction countries and individuals,and the courts repeatedly upheld these actions.So,this

166、 is new territory for IEEPA.However,the courts have generally upheld the presidents power to declare an international economic emergency,and tend to be deferential on matters of national security.And while the use of IEEPA to impose tariffs is novel,the Nixon Administration invoked IEEPAs predecesso

167、rthe 1917 Trading with the Enemy Actto justify a 10%import tariff in 1971 due to a balance-of-payments crisis.The Court of Customs and Patent Appeals,which was the appellate court at the time,upheld this action in United States v.Yoshida International.So,some legal basis exists for such use of IEEPA

168、.Jenny Grimberg:But can the president just declare anything a“national emergency”to justify tariffs?Tim Brightbill:Thats the key question.Trump has declared several national emergencies,including the fentanyl crisis and the immigration issues at our borders,and used these to justify the China,Mexico

169、,and Canada tariffs.But he has also talked at length about dumping,subsidies,and other unfair trade practices.Whether the courts will uphold Trumps tariff actions because a genuine economic emergency exists that would justify tariffs,or find that the president is just using IEEPA to address trade pr

170、oblems that should be covered under other laws,is an open question.During the first Trump Administration,the courts were generally deferential to the presidents ability to decide what constituted a national security threat or economic emergency.But even in those cases,some judges raised different op

171、inions and doubts as to whether the president had overreached his authority.The courts have also indicated that the presidents power to act during national security or economic emergencies is not without limits.Eventually,the president may cross the line,or the remedy offered of tariffs might not al

172、ign with the alleged problem.So,any court challenges on the presidents IEEPA authority will be important to watch.During the first Trump Administration,the courts were generally deferential to the presidents ability to decide what constituted a national security threat or economic emergency.Jenny Gr

173、imberg:Who might file such court challenges,and what court(s)would hear any challenges to tariff actions?Tim Brightbill:Trade associations,companies,or importers paying the increased tariffs might bring a lawsuit;hundreds of importers filed the ultimately unsuccessful lawsuit to overturn the Section

174、 301 China tariffs.These cases would be heard by the US Court of International Trade in New York,followed by the Court of Appeals for the Federal Circuit in Washington and then possibly the US Supreme Court,though few trade cases ever make it to the Supreme Court.The Court of International Trade hea

175、rd the Section 232 disputes on steel and aluminum as well as the challenges to the Section 301 tariffs on China during the first Trump Administration.And in both of those cases,the Court upheld the presidents power to act.Interview with Timothy C.Brightbill hEl Goldman Sachs Global Investment Resear

176、ch 13 Top of Mind Issue 136 Jenny Grimberg:If court cases are filed against tariff actions,do the tariffs in question still take effect?Tim Brightbill:Whether the parties that bring a lawsuit against the Administrations tariff actions can also obtain an injunction to stop the tariffs is an important

177、 question,which is already playing out in the legal challenges to some of the Presidents other recent executive actions.Such injunctions are difficult to obtain because they require the plaintiffs to show evidence of“irreparable harm”,and financial losses due to tariffs often dont cut ita higher sho

178、wing of financial harm,such as a significant likelihood that the company or importer could go out of business altogether as a result of the tariffs,would be required.So,injunctions,and trade lawsuits in general,tend to be an arduous process for the plaintiffs,and oftentimes a lengthy one.A case file

179、d before the Court of International Trade and then any appeal to the Federal Circuit could each take six months to a year to resolve.So,even if the arguments may be on their side,companies cannot rely on court challenges to address the impact of tariffs;they have to think carefully about how to mini

180、mize the impacts to their businesses through other means,perhaps by shifting their supply chains closer to home.Jenny Grimberg:Which,if any,of the tariffs that Trump has announced/floated will likely invite challenges?Tim Brightbill:Many,if not all,of Trumps tariff actions will likely face legal cha

181、llenges despite the fact that the courts upheld such actions during the first administration.That said,the Trump Administration has come into office more prepared for such challenges than it was eight years agoit is more well-versed in the legal authorities at its disposal and how to utilize them,an

182、d is more willing to test previously-unused authorities like IEEPA or Section 122 of the 1974 Trade Act to impose tariffs.In my view,the tariffs announced so far are aggressive but arguably within the presidents authority.So,while I expect challenges,the recent tariff actions are unlikely to be halt

183、ed by the courts.In my view,the tariffs announced so far are aggressive but arguably within the presidents authority.So,while I expect challenges,the recent tariff actions are unlikely to be halted by the courts.Jenny Grimberg:If not the courts,what role could Congress potentially play in curbing Tr

184、umps tariff plans?Tim Brightbill:Article 1,Section 8 of the Constitution gives Congress the power to regulate commerce with foreign nations and to lay and collect taxes and duties.But,over time,Congress has delegated that power as well as the power to declare national emergencies and security risks

185、to the Executive Branch through the authorities weve discussed.Now,Congress could try to reclaim some of this power.Legislative proposals to do so were floated during the first Trump Administration when Trump initiated an investigation on automobile imports on US national security grounds,which seve

186、ral senators and members of Congress claimed was an overreach of presidential authority.If the president continues to push the boundaries of his authorities,Congress may again try to restrict the presidents trade authority,which would require passing a law.However,its hard to envision that the presi

187、dent would sign a law to restrict his own power,complicating any such legislative effort.Congress could more easily influence trade policy by withholding agreement on key legislation.Congress has the power to appropriate money and therefore has substantial leverage as the March 14 deadline to enact

188、a fiscal year 2025 spending agreement and prevent a government shutdown approaches.Congress could pass a temporary stopgap measure in the form of a continuing resolution,and lawmakers could potentially threaten to vote no or withhold their vote on the resolutionwhich requires a majority vote in both

189、 the Senate and the Houseunless the Executive Branch agrees to a deal on tariffs.The reconciliation bills currently making their way through Congress also give it leverage,as they include funding for many of the administrations priorities.Lawmakers concerned about tariffs could similarly oppose thes

190、e bills or hold out for an agreement on tariffs.So,Congress has a few tools to potentially push back on the presidents tariff plans,if it so desires.Bottom line:neither the WTO nor the USMCA will likely be an impediment to Trumps tariff plans.Jenny Grimberg:How much power would targeted countries ha

191、ve to challenge tariffs through the World Trade Organization(WTO)and the US-Mexico-Canada Agreement(USMCA)?Tim Brightbill:The WTO has limited power to police the Trump Administrations actions.The WTO ruled that Trumps first-term steel and aluminum tariffs and Section 301 China tariffs violated WTO a

192、greements,and a panel on the recently-announced tariffs would probably make the same finding.However,the WTO Appellate Bodywhich hears appeals in disputes brought by the organizations membershas been shut down for several years as the US has blocked the appointment of the new members necessary to fo

193、rm a quorum.This prevents a WTO ruling from taking effect,as the US can simply appeal any losing decision to the now-defunct Appellate Body in a process known as“appealing into the void”,which is what the US previously did.Mexico and Canada would also face an uphill battle challenging Trumps tariffs

194、 under the USMCA.The Agreement includes a national security provisiona standard feature of the US free trade agreementsthat allows members to take actions necessary to protect their security interests as they themselves define them.So,the US could invoke this provision if Mexico and Canada pursue a

195、challenge.In addition,the USMCA will be renegotiated next year,and the Trump Administration is likely counting on being able to reach a deal with Canada and Mexico before any dispute panel would rule on the new tariffs.So,bottom line:neither the WTO nor the USMCA will likely be an impediment to Trum

196、ps tariff plans.hEl Goldman Sachs Global Investment Research 14 Top of Mind Issue 136 Europe Europe Sven Jari Stehn Q:What is the state of play of US tariffs in your region,and what will they mean for growth/inflation/monetary policy?A:President Trump has floated several tariff proposals that would

197、affect Europe,and we expect tariffs on imports of EU cars,critical goods,and steel/aluminum in our baseline(see pgs.8-9).We find that the direct trade effects of these tariffs on Euro area growth will likely be modest,especially if the EU retaliates.More importantly,we have found that elevated trade

198、 policy uncertainty will have notably negative effects on European investment,confidence,and growth.As a result,we estimate that the trade tensions will lower Euro area real GDP by 0.5%this year,with more substantial effects in Germany than southern Europe given Germanys more export-oriented economy

199、.By contrast,we see limited inflation effects from the trade tensions.We would expect EU tariff retaliation and a weaker Euro to push up European inflation.But weaker growth and trade diversion effects(with China selling goods to Europe at a lower price)should push the other way.On net,we expect a 0

200、.05%increase in consumer prices owing to the tariffs in our baseline.Given weaker growth and only marginally higher inflation,we believe that the trade tensions will reinforce the ECBs resolve to normalize interest rates,and,accordingly,expect continued rate cuts to a 1.75%terminal rate.Q:What might

201、 such retaliation look like?A:We expect the EU to retaliatebut avoid a sharp escalationby raising tariffs on a few key products equivalent to 50%of the value of EU exports affected by US tariffs.We would expect the EU to start with metals,agricultural products,and some transport equipment(boats and

202、vehicles),and possibly extend to chemicals and aircraft.Consistent with the 2018 precedent,we expect the European Commission would publish a list of additional US goods that would be subject to EU tariffs at a later stage whose value would match the full amount of EU exports affected by US tariffs s

203、hould the US not show any cooperation on tariff policy.Q:What would a more extreme tariff scenario than your base case look like for Europe,and what would it mean for growth/inflation/monetary policy?A:We would expect more meaningful growth downside from US tariffs that target all EU goods.We estima

204、te an incremental 0.5%GDP hit relative to our baseline in the event of a 10%US tariff on all EU goods and an incremental 0.7%hit if US tariffs matched Europes value-added tax(VAT)rates,reflecting a growth hit from a larger net trade hit and higher uncertainty that is only partly offset by more aggre

205、ssive policy.We estimate such tariffs would boost inflation by 0.1-0.2pp relative to our baseline.Faced with sharply weaker growth in the case of such an across-the-board tariff,we would expect the ECB to cut rates further than in our baseline.Mexico Mexico Alberto Ramos Q:What is the state of play

206、of US tariffs in your country,and what will they mean for growth/inflation/monetary policy?A:The Trump Administration issued an Executive Order on February 1 levying a 25%tariff on all imports from Mexico,though the tariffs were put on hold until March 4 in light of the Mexican authorities“cooperati

207、ve stance”and commitment to reinforce the northern border.Meanwhile,bilateral teams are working on security and trade issues with a view to achieve a“deal”.As such,we see it as more likely than not that the 25%tariff will ultimately not be implemented.This led us to leave our Mexico real GDP forecas

208、tswhich already incorporate the 0.5-1%growth drag we expect from trade policy uncertaintyas well our inflation and monetary policy forecasts unchanged.Trump also signed an Executive Order levying a 25%tariff on all steel and aluminum imports,effective March 12.While these tariffs have a higher likel

209、ihood of implementation,Mexicos steel/aluminum exports account for only a small share of its total exports and GDP,limiting the growth,inflation,and policy impacts.Q:What retaliatory measures might Mexico enact if the US were to impose tariffs?A:The Mexican authorities have stated that the country w

210、ould retaliate with tariff and non-tariff measures if the US were to levy tariffs on Mexico.We are of the view that the Mexican authorities will remain cooperative and would likely avoid a tit-for-tat tariff response and/or actions that would escalate trade frictions with its main trading partner.Bu

211、t we anticipate that authorities would levy targeted tariffs on a limited but politically-sensitive set of goods(such as meat,dairy products,fruit and vegetables,beverages,etc.),as they did during the 2018/19 trade war,should the Trump Administration follow through on its tariff threats.Q:What would

212、 a more extreme tariff scenario than your base case look like for Mexico,and what would it mean for growth/inflation/monetary policy?A:We view the potential implementation of the postponed 25%tariff on Mexico as a significant risk.If such tariffs were implemented,we would expect a growth hit from th

213、e drag on real income and reduction in exports to the US that is only partially offset by currency depreciation and the domestic monetary policy response.In a scenario with tit-for-tat retaliation,the combined impact of the trade policy uncertainty drag and the across-the board 25pp tariff increase

214、would lower Mexico GDP by an estimated 3.5%and raise prices by 250bp,with the impact on domestic prices a smallerbut still significant100bp if Mexico elected not to retaliate.In such an environment,we would expect the central bank to initially assume a conservative posture to preserve financial stab

215、ility and anchor the currency,but to ultimately adopt a more accommodative/dovish stance to counteract the recessionary forces triggered by the tariff-driven negative supply shock.Broader Mexico retaliation than we expect would have a larger impact on domestic growth and inflation,presenting the cen

216、tral bank with more difficult tradeoffs to manage.Q&A:ex-US impacts of Trump tariffs We ask our economists about the potential implications of Trump tariffs for the US largest trading partners hEl Goldman Sachs Global Investment Research 15 Top of Mind Issue 136 China China Hui Shan Q:What is the st

217、ate of play of US tariffs in your country,and what will they mean for growth/inflation/monetary policy?A:President Trump implemented an additional 10%tariff on all Chinese goods on February 4,which we estimate will lower Chinas real GDP by 0.5pp in 2025.By contrast,the inflation impact will likely b

218、e limitedwith the 10%tariff reducing CPI inflation by only an estimated 0.1ppprimarily because the linkage between the output gap and inflation is weak in China.Unlike other countries,tariffs are deflationary in China as the country imports only a limited amount from the US and,as the worlds largest

219、 exporter,would have to see domestic prices fall for domestic buyers and/or importing countries to absorb Chinese products if the US imposes heavy tariffs.As tariff uncertainties linger and the CNY remains under pressure,the PBOC has kept the daily USDCNY fixing unchanged as it prioritizes FX stabil

220、ity,another reason why tariffs will be deflationary.In this environment,US tariffs are constraining the PBOCs ability to cut policy rates and ease policy.We continue to expect the US to increase the effective tariff rate on China by an additional 10pp this year,which,all else equal,would reduce Chin

221、ese growth by an estimated 0.7pp and CPI inflation by 0.1pp as expected FX depreciation would likely raise import prices on the margin and offset the negative inflation effect of a slightly larger growth drag.Q:What retaliatory measures might China enact,and to what extent could these measures offse

222、t the impacts of US tariffs?A:On February 4,the Chinese government announced a combination of retaliatory measures in response to the additional 10%US tariff,which were noteworthy in two respects.First,the retaliatory tariffs were much less than proportional:China levied 12%tariffs on$14bn of US goo

223、ds compared to the US imposition of 10%tariffs on over$400bn of Chinese goods.Second,the responses were coordinated,with various Chinese government agencies simultaneously announcing export controls of critical minerals,adding US companies to the“Unreliable Entity List”,and launching antitrust probe

224、s on Google.Taken together,these demonstrate that,compared to the 2018/19 trade war,the Chinese government is relying less on retaliatory tariffs and FX depreciation and more on other instruments such as export controls and even geopolitical levers to retaliate this time around.As such,we believe th

225、at only 0.2pp of the 0.7pp growth hit under our baseline tariff assumptions will be offset through FX depreciation,with another 0.3pp offset coming from fiscal stimulus,leaving the net growth drag at 0.2pp.Q:What would a more extreme tariff scenario than your base case look like for China,and what w

226、ould it mean for growth/inflation/monetary policy?A:In early 2024,Trump threatened to levy an additional 60%tariff on China,which remains a risk.We have found that the growth impact of such a tariff would be significant at an estimated 2pp of real GDP.The Chinese government may allow for meaningful

227、FX deprecation to partially offset this growth headwind,though probably not quite as much as implied by the 2018/19 experience given larger capital outflow pressures today.Once the currency stabilizes at a weaker level,the PBOC could cut policy rates to ease policy and facilitate fiscal stimulus.Thi

228、s combination of slower growth and a weaker currency could leave Chinas CPI inflation 0.3pp lower than if no further US tariffs are imposed.But the net CPI inflation impact may be smaller if the government implemented substantial fiscal stimulus to counter the effects of the large tariff increase,wh

229、ich we view as likely given the governments growth target.Canada Canada Joseph Briggs Q:What is the state of play of US tariffs in your country,and what will they mean for growth/inflation/monetary policy?A:President Trump issued an Executive Order on February 1 levying a 25%tariff on all imports fr

230、om Canada.These tariffs were put on hold until March 4 and we ultimately dont expect implementation.However,Canada is highly exposed to the 25%tariffs on steel and aluminum scheduled to go into effect on March 12 and the tariffs on critical exports we expect,which together accounted for over 7%of Ca

231、nadas GDP in 2024.Factoring in an expected drag from trade policy uncertainty and some fiscal and monetary policy offsets,we expect Canadas GDP will take a roughly 1%hit from these tariffs.The inflation impacts of the tariffs will largely depend on the extent of retaliation.If Canada retaliates by r

232、aising the tariff rate on US imports by a third of the amount that the US raises tariffs on Canadian imports,we would anticipate a modest boost of 0.2pp to prices.The price impact would be larger if Canada fully retaliates,on the order of 0.5%.We see US tariffs as dovish for the BoC since the large

233、growth drag will likely amplify the BoCs concerns around weak activity,consistent with our forecast for two more 25bp cuts in 2025 to 2.5%.Q:What might such retaliation look like?A:The Canadian government has yet to announce retaliatory measures for the steel and aluminum tariffs,but when threatened

234、 with 25%blanket tariffs in January,Prime Minister Trudeau promised a“robust response”while noting that“everything is on the table”,including a“dollar-for-dollar response”.Canada subsequently provided a list of C$30bn in goodslargely food,apparel,and household productsthat it would initially retalia

235、te with 25%tariffs of its own and announced plans to retaliate on an additional$C125bn in goodslargely motor vehicles,aerospace products,and steel and aluminumin mid-February.While these retaliatory tariffs were delayed in early February,we would expect any future retaliation package to look similar

236、 to these proposals.Q:What would a more extreme tariff scenario than your base case look like for Canada,and what would it mean for growth/inflation/monetary policy?A:If Trump ultimately implements a 25%tariff on most Canadian exports(with oil and gas tariffs increasing by a less severe 10%)and leav

237、es it in place permanently(or at least until a new USMCA agreement is reached ahead of the mid-2026 deadline),we estimate that the hit to Canadas GDP would likely rise to over 2%,while the boost to prices would likely rise to over 0.5%(and to well over 1%if Canada were to fully retaliate).We expect

238、that the BoC would cut rates by an incremental 25-50bp relative to our baseline forecast if these tariffs were delivered,consistent with recent comments from Governor Macklem that the BoC would likely ease policy to offset an initial loss in demand and help the economy adjust to a trade shock.hEl Go

239、ldman Sachs Global Investment Research 16 Top of Mind Issue 136 While our baseline forecasts assume a meaningful but narrower set of tariffs than the full range that Trump has floated,the large number of potential policy changes raises significant uncertainty around the global growth and inflation i

240、mpacts of the Administrations trade agenda.On the growth front,our Global Economics team finds moderate downside risk to global growth in most tariff scenarios,with larger drags in non-US economies,though the distribution of effects depends on the nature of the tariff.Under our baseline tariff scena

241、rio,we estimate that tariffs will lower US GDP by 0.2%,with larger but still modest growth impacts on non-US economies Est effect of GS baseline tariff expectations on GDP,%A 25%North America tariff would weigh more significantly on Mexican and Canadian growth,with Mexico in particular experiencing

242、a significant growth hit Est effect of a 25%North America tariff on GDP,%Similarly,a 25%tariff on the EU would create larger growth headwinds for the Euro area and central Europe Est effect of a 25%EU tariff on GDP,%Mexico,Canada,and Korea are particularly exposed to a 25%global auto tariff,and as s

243、uch,would see larger growth hits Est effect of a 25%global auto tariff on GDP,%Reciprocal tariffs would have the largest incremental growth impact on Vietnam and Hungary relative to our baseline Est effect of reciprocal tariffs on GDP,%A 10%universal tariff would have the most significant impact on

244、global growth,roughly doubling the overall hit to global GDP relative to our baseline Est effect of a 10%universal tariff on GDP,%-1.2-1.0-0.8-0.6-0.4-0.20.0CanadaSouth KoreaMexicoHungarySwitzerlandTurkeySwedenCzech RepublicMainland ChinaVietnamNorwayChileIndonesiaSingaporeJapanMalaysiaEuro AreaIndi

245、aGlobalNew ZealandPolandAustraliaColombiaRussiaBrazilUKUSUSOther DMsEMsGlobal-4.0-3.5-3.0-2.5-2.0-1.5-1.0-0.50.0MexicoCanadaSouth KoreaHungarySwitzerlandTurkeySwedenMainland ChinaCzech RepublicVietnamNorwayChileGlobalJapanSingaporeIndonesiaMalaysiaEuro AreaIndiaNew ZealandPolandAustraliaColombiaBraz

246、ilRussiaUKUSUSOther DMsEMsGlobal-1.6-1.4-1.2-1.0-0.8-0.6-0.4-0.20.0HungarySwedenSouth KoreaCzech RepublicCanadaSwitzerlandMexicoTurkeyEuro AreaMainland ChinaVietnamNorwayIndonesiaSingaporeJapanPolandChileMalaysiaIndiaGlobalNew ZealandAustraliaColombiaBrazilRussiaUKUSUSOther DMsEMsGlobal-1.8-1.6-1.4-

247、1.2-1.0-0.8-0.6-0.4-0.20.0MexicoCanadaSouth KoreaHungarySwitzerlandTurkeySwedenMainland ChinaCzech RepublicVietnamJapanNorwayChileIndonesiaSingaporeMalaysiaGlobalEuro AreaIndiaNew ZealandPolandAustraliaColombiaBrazilRussiaUKUSUSOther DMsEMsGlobal-1.6-1.4-1.2-1.0-0.8-0.6-0.4-0.20.0VietnamCanadaSouth

248、KoreaMexicoHungaryTurkeySwitzerlandMainland ChinaSwedenCzech RepublicIndonesiaNorwayMalaysiaChileIndiaJapanSingaporeGlobalEuro AreaNew ZealandAustraliaPolandColombiaBrazilRussiaUKUSUSOther DMsEMsGlobal-2.5-2.0-1.5-1.0-0.50.0MexicoVietnamCanadaSouth KoreaSwitzerlandHungaryTurkeyCzech RepublicSwedenMa

249、inland ChinaMalaysiaSingaporeChileNorwayGlobalIndonesiaJapanIndiaEuro AreaNew ZealandColombiaAustraliaPolandRussiaBrazilUKUSUSOther DMsEMsGlobalA look at the global growth hEl Goldman Sachs Global Investment Research 17 Top of Mind Issue 136 However,the inflation impacts of US tariffs will likely be

250、 more significant in the US,with more muted price impacts in non-US economies.In most tariff scenarios,our Global Economics team estimates that the boost to prices outside the US would generally be less than 0.2%and average to near-zero on a global ex-US basis.And tariffs would actually weigh margin

251、ally on prices in China.Under our baseline tariff scenario,we estimate that tariffs will raise US prices by around 0.4pp,with much more muted inflation impacts outside the US Est effect of GS baseline tariff expectations on prices,%However,a 25%North America tariff would result in moderate prices in

252、creases in Canada and Mexico Est effect of a 25%North America tariff on prices,%A 25%EU tariff would not have material price implications for the region,with the US,again,seeing a larger inflation effect Est effect of a 25%EU tariff on prices,%Mexico,Canada,and Korea are,again,particularly exposed t

253、o an auto tariff,and so would see somewhat larger price impacts Est effect of a 25%global auto tariff on prices,%The inflationary impacts of reciprocal tariffs would follow a similar pattern,although the effects would be slightly larger than in our base case Est effect of reciprocal tariffs on price

254、s,%A 10%universal tariff would have the largest impact on US inflation,with a 1%boost to prices,although the global average would remain relatively small Est effect of a 10%universal tariff on prices,%Note:Our baseline assumes the already-implemented 10pp tariff rate increase on Chinese imports,anno

255、unced tariffs on aluminum and steel,an additional 10pp tariff rate increase on China,a 25pp tariff rate increase on EU autos,and a 10pp tariff rate increase on critical imports.Source for all charts:Goldman Sachs GIR.-0.10.00.10.20.30.40.5Mainland ChinaRussiaNorwayNew ZealandIndonesiaUKIndiaEuro Are

256、aSwedenAustraliaVietnamCzech RepublicBrazilHungaryColombiaSwitzerlandPolandChileJapanTurkeySingaporeMalaysiaGlobalSouth KoreaMexicoCanadaUSUSOther DMsEMsGlobal-0.20.00.20.40.60.81.01.2Mainland ChinaRussiaNorwayNew ZealandIndonesiaUKIndiaEuro AreaSwedenAustraliaVietnamCzech RepublicBrazilHungaryColom

257、biaSwitzerlandPolandChileJapanSingaporeMalaysiaTurkeyGlobalSouth KoreaCanadaMexicoUSUSOther DMsEMsGlobal-0.20.00.20.40.60.81.0Mainland ChinaRussiaNorwayNew ZealandIndonesiaUKIndiaAustraliaSwedenVietnamEuro AreaBrazilCzech RepublicColombiaHungarySwitzerlandChileJapanGlobalSingaporeMalaysiaPolandTurke

258、ySouth KoreaMexicoCanadaUSUSOther DMsEMsGlobal-0.2-0.10.00.10.20.30.40.50.60.70.8Mainland ChinaRussiaNorwayNew ZealandIndonesiaUKIndiaEuro AreaSwedenAustraliaVietnamCzech RepublicBrazilHungaryColombiaSwitzerlandPolandChileSingaporeMalaysiaGlobalTurkeyJapanSouth KoreaCanadaMexicoUSUSOther DMsEMsGloba

259、l-0.10.00.10.20.30.40.50.60.70.8Mainland ChinaRussiaNorwayNew ZealandUKIndonesiaIndiaEuro AreaSwedenAustraliaVietnamCzech RepublicBrazilHungaryColombiaSwitzerlandPolandChileJapanSingaporeGlobalMalaysiaTurkeySouth KoreaMexicoCanadaUSUSOther DMsEMsGlobal-0.20.00.20.40.60.81.01.2Mainland ChinaRussiaNor

260、wayIndonesiaNew ZealandIndiaUKEuro AreaSwedenVietnamAustraliaCzech RepublicHungaryBrazilColombiaPolandSwitzerlandGlobalJapanTurkeyChileMalaysiaSingaporeSouth KoreaCanadaMexicoUSUSOther DMsEMsGlobaland inflation impacts of tariffs hEl Goldman Sachs Global Investment Research 18 Top of Mind Issue 136

261、Joseph Briggs argues that the sharp rise in trade policy uncertainty from Trumps tariff volley could damage global growth In addition to implementing tariffs on China and announcing steel and aluminum tariffs,President Trump has floated a broad range of tariff policies,including reciprocal tariffs a

262、nd tariffs on“critical”goods,global autos,Canada,Mexico,and the EU,as well as further China tariffs and a 10%“global”tariff on all US imports.While we think it is unlikely that all of these proposals will be implemented and include a narroweralbeit still meaningfulset of tariffs in our baseline,the

263、large number of potential policy changes raises significant uncertainty around President Trumps trade agenda.Trade policy uncertainty indices have therefore unsurprisingly risen sharply in recent weeks.But even if Trump delivers a more benign set of tariffs than his recent proposals imply,history su

264、ggests that the sharp rise in trade policy uncertainty could damage global growth.Trade policy uncertainty has risen sharply Trade policy uncertainty based on indices,%of 2018 peak Note:Indices are normalized so that 0 corresponds to the sample minimum and 100 to the 2018 peak;data through 4Q24.*Sha

265、re of companies mentioning tariffs or trade policy in their earnings calls.*Fed index created by Caldara,Iacoviello,Molligo,Prestipino,Raffo(2020).Source:Bloomberg,Federal Reserve,Haver Analytics,Goldman Sachs GIR.Lessons from history Much of the growth hit from trade uncertainty arises from its imp

266、act on investment as companies delay investments until the policy outlook becomes clearer.Trade uncertainty weighed on growth in 2018-2019,particularly in the Euro area Implied real GDP hit from trade uncertainty due to lower investment,pp Source:Goldman Sachs GIR.During the 2018-2019 trade war,we f

267、ound that mentions of trade uncertainty on public company earning calls as well as moves in stock prices around tariff announcements predicted a drag on investment.And,looking across countries prior to the 2018-2019 trade war,we also found that a rise in the Feds global trade policy uncertainty inde

268、x has predicted an investment drag in export-oriented economies.Taken together,we estimate that a rise in trade policy uncertainty as large as the increase observed during the 2018-2019 trade war could lower GDP growth by around 0.3pp in the US and by a more significant 0.9pp in the Euro area,with o

269、ther major exporters likely experiencing similarly large drags.suggest a trade uncertainty growth drag Given the rise in trade policy uncertainty over last few months,it seems likely that a similar dynamic will repeat in 2025-2026.In fact,a drag on investment from trade policy uncertainty accounts f

270、or most of the negative growth impact that we expect from Trumps tariff proposals.However,the good news is that any growth hit from trade policy uncertainty is likely capped at a certain level.This reflects the fact that uncertainty mostly delays investmentrather than deters it,as an actual policy c

271、hange wouldand the marginal hit to investment from increased uncertainty diminishes sharply as uncertainty rises to very high levels.Investment by export-focused manufacturers also accounts for only 0.5-1.5%of GDP in most DM countries,which should contain the growth hit even if trade policy uncertai

272、nty increases significantly.But the bad news is that a drag from uncertainty could materialize even if Trump delivers a more benign set of tariff increases than his recent proposals would suggest.Limited early evidence of a growth drag So far,little concrete evidence exists of trade policy uncertain

273、ty weighing on investment and growth.Business sentiment and manufacturing business surveys have improved since the US election,particularly in the US,where our manufacturing survey tracker rose by four points to 53.5 in January.These dynamics likely reflect the growth positive aspects of Trumps agen

274、danamely,deregulationas well as some frontloading of imports and investment before tariffs materialize.However,while sentiment and survey data have yet to reflect much evidence of an uncertainty drag,some early signs of tariff impacts on investment have emerged elsewhere.As recently noted by our US

275、economists,equity analyst expectations for 2025 capex were revised up 5%for S&P 1500 companies in aggregate over the last quarter but were only revised up by 2%for a basket of companies with broad exposure to tariffs,and were revised down by 1%for companies with a high exposure to Canada,Mexico,and

276、China.These patterns provide early evidence that trade policy uncertainty will likely create a headwind to global growth in 2025,particularly if tariff proposals continue at the same pace as in recent weeks.Joseph Briggs,Senior Global Economist Email: Goldman Sachs&Co.LLC Tel:212-902-2163 0204060801

277、0012014020162018202020222024STOXX 600*Russell 3000*Federal Reserve*-1.6-1.4-1.2-1.0-0.8-0.6-0.4-0.20.0USEuro AreaEarnings call mentionsStock returns around tariffannouncementsCross country panelUS average:-0.3ppEuro area average:-0.9ppUncertainty is the only certainty hEl Goldman Sachs Global Invest

278、ment Research 19 Top of Mind Issue 136 Trade policy(uncertainty)in focus 0510152025303540455001002003004005006007008001/1/20102/1/20113/1/20124/1/20135/1/20146/1/20157/1/20168/1/20179/1/201810/1/2019 11/1/2020 12/1/20211/1/20232/1/2024%IndexTrade policy uncertainty index(lhs)Share of management team

279、s mentioning tariffs on Russell 3000 quarterly conference calls(rhs)Share among companiesreporting after the Canada,Mexico,and China tariffs were announcedTrump is reelected and,following his inauguration,he announces a slew of new tariff measuresTrump announces tariffs on Chinese goods,kicking off

280、a tit-for-tat trade war with ChinaThe US withdraws from the Trans-Pacific Partnership Trump continues to crack down on China during his last few weeks in office,adding more Chinese companies to the US trade blacklist and restricting US investment into ChinaUS-China trade war ramps up,but the countri

281、es ultimately reach a trade deal later in the yearTransatlantic Trade and Investment Partnership negotiations between the US and EU beginSource:Caldara,Iacoviello,and Molligo,GS Dataworks,Goldman Sachs GIR.Special thanks to GS US Senior Economist Ronnie Walker for chart.01002003004005006007008001960

282、 1965 1971 1976 1982 1987 1993 1998 2004 2009 2015 2020IndexA longer look back at trade policy uncertainty2018-2019 Trump trade warNAFTA negotiationsNixon 10%import surchargeUS Trans-Pacific Partnership withdrawal Trump 2.0 tariffsUS-Japan semiconductortrade war hEl Goldman Sachs Global Investment R

283、esearch 20 Top of Mind Issue 136 Management commentary on tariffs,2024Q4 earnings season Company Comment Some companies may delay capex until there is greater certainty about potential tariffs General Motors What we wont do is spend a large amount of capital without clarity about potential tariffs.T

284、hree Part Advisors Some of these projects are dependent on both the cost of the capital,but also tariffs could impact supply cost of steel.So you now have some projects where the escalator clauses are being negotiated.Aptiv We believe its prudent to include additional conservatism for North American

285、 vehicle production in our current outlook for 2025.Tariffs introduce a certain amount of uncertainty into the system,which,in our view,will affect supply chains and when it affects supply chains,it will affect production.Ryder System Theres still some concern out there from the customer base on,one

286、,what youre seeing from tariffs and uncertainty around that and then still uncertainty in the general economic environment,which I think is still continuing to cause delays.CleanSpark So I think theres going to be a potential barrier to growth for some of the smaller scale minersbut well see what ha

287、ppens with the tariffs,and well react accordingly.Pilgrims Pride I think theres still a lot of uncertainty about if,when and where the tariffs will be in place.And also what would be the answer from the trading partners?W.W.Grainger The uncertainty of the tariffs is still pretty strong.Coty In this

288、varying macro environment,which includes potential tariff wars.we think that it is no longer prudent to put specific sales growth targets.Zebra Technologies This uncertainty is not helping because our customers are focused,as we are,on things like,what happens if and how do I go mitigate tariffs and

289、 other things as opposed to finalizing projects specifically with us.Companies plan to pass along costs to consumers to the extent possible AMETEK We plan to pass on the cost impact of the tariffs,if the tariffs get enacted,to our customers,as we have done previously.Cardinal Health If there are wid

290、espread tariffs,anywhere from the 10%to 25%range,I anticipate there will be corresponding price increases.We will do what we can to minimize those,but with 1%to 2%margins,we will not absorb whatever impacts are left.Corning We certainly have the ability to raise price if that is something that is re

291、quired to do.W.W.Grainger Depending on what happens in the marketplace,the competitive environment,we would typically try to pass on and keep the same margins in what we pass on.Jabil While tariffs impact end customer demand,any changes in tariff costs have historically been largely a pass-through c

292、ost for Jabil.Marathon Petroleum We think its likely if tariffs will be put in place.that we would see cost increases.We believe that the majority of that will ultimately be borne by the producer and then,frankly,to a lesser extent,the consumer.Limited plans to reshore production but many examples o

293、f frontloading imports ahead of tariffs Leggett&Platt Our teams continue to analyze multiple tariff scenarios,are qualifying alternative suppliers,and are evaluating potential geographic shifts in production.Taylor Morrison Home Given the steps we have taken to.reshore products and strengthen our su

294、pply chain resiliency in recent years,we believe we are prepared for any potential disruptions.Fastenal We accelerated some inventory ceded for future delivery into current periods ahead of potential new tariffs.MSC Industrial Weve taken a series of actions including stocking inventory of our highes

295、t turned products that would be impacted by tariffs.Costco Wholesale We have a plan to mitigate the impact of tariffs and typically well look where we can to pull forward inventory buying.3M We.saw modest front loading from an anticipated change in tariffs.Zebra Technologies Our teams are doing ever

296、ything they can to pull volume in from a purchasing perspective and get that inventory into the US as early as possible ahead of potential tariff impact.What are companies saying about tariffs?Source:Company data,Data compiled by Goldman Sachs GIR.Special thanks to GS US Senior Economist Ronnie Walk

297、er for table,which originally appeared in a Feb 17 US Economics Analyst.hEl Goldman Sachs Global Investment Research 21 Top of Mind Issue 136 Kamakshya Trivedi discusses four lessons from market responses to the tariff developments of the past month In the short time since his inauguration,President

298、 Trump has implemented an additional 10%tariff on China,threatened several other tariffs(on Mexico,Canada,and autos),and floated a variety of tariff proposals(universal,reciprocal,and critical imports tariffs).Asset markets response to these developments provides four key lessons on how markets are

299、thinking about tariff risks and where opportunities may lie.1.Tariffs have meaningful market impacts.Currencies are the most obvious place to see this,because tariffs have a strong,direct,and unambiguous impact on exchange rates,unlike other asset classes.While several channels are at work,flexible

300、exchange rates essentially help offset the tariff-driven shift in the relative cost of doing business.Consistent with this,and despite a highly overvalued Dollar coming into the year,the Dollar immediately and significantly strengthened when 25%tariffs on Canada and Mexicotwo of the US most importan

301、t trading partnerswere perceived as imminent.Beyond the Dollar strengthening on a broad basis,including versus the Euro as Europe was perceived as next in line as a tariff target,the yield curve also flattened as markets priced in a higher initial inflation shock and lower growth down the line,and U

302、S and global equities fell sharply.2.but if deep tails dont materialize,scope exists for relief,especially in non-US assets.Equity markets recovered swiftly once it became evident that deep tariff tail risks were not imminent,although have given back some gains as US growth concerns have emerged.But

303、 the market response to recent threats of reciprocal and critical imports tariffs and upcoming deadlines has also been more muted than to the earlier Canada and Mexico tariffs,partly because of the long lead time on any action and skepticism about implementation owing to the Canada and Mexico postpo

304、nement experience.The still broadly benign global macro backdrop of moderate growth and slowly cooling inflation points to higher equities,especially if the worst tariff tail risks are avoided.That is particularly true for non-US equities(Europe and China),as well as currencies where deep tariff ris

305、ks are more priced in and starting valuations are less challenging,such as the Mexican Peso and(to a more limited extent)the Chinese Renminbi.Equity markets recovered swiftly when deep tariff tail risks didnt immediately materialize,but have since given back some gains%(lhs),bp(rhs)Source:Bloomberg,

306、Goldman Sachs GIR.3.Tariff risk premium in currencies has ebbed,creating opportunities to reset Dollar hedges.The repeated delays in the implementation of threatened tariffs means that the risk of a repeat of the 2017 experience is rising.The first year of the previous Trump Administration saw littl

307、e actual change in trade policy despite similar threats,leading to one of the most significant Dollar drawdowns in the post-Global Financial Crisis period.Market pricing has moved in the same direction this time around:the pullback in key Dollar crosses and the broad Dollar itself since early Februa

308、ry now suggests little or no embedded tariff tail risk premium.Tariffs did ultimately materialize in the second year of the first Trump Administration in 2018 and went on to boost the Dollar.And despite the false starts,our economists still expect additional 10%tariffs on China plus tariffs on criti

309、cal imports and European autos ahead(see pgs.8-9).Should these or bigger tariffsincluding reciprocal or universal tariffsmaterialize in coming months,we would expect the Dollar to march higher again.Since that tariff tail risk now looks underpriced and is a key risk to multi-asset or long equity ris

310、k portfolios,we see good opportunities to reset hedges in EUR/USD downside or USD/CAD upside.FX markets are now embedding little to no tariff tail risk premium%Source:Goldman Sachs FICC and Equities,Goldman Sachs GIR.4.but inflation risk is still embedded in front-end rates.In contrast to currencies

311、,rates markets have continued to reflect the risk of somewhat higher inflation than our forecasts in the front-end of rate curves,even as we too have moderately raised our inflation forecasts on tariff developments.That said,we dont view market pricing as unreasonable given the significant uncertain

312、ty about trade policy,which also makes it easy to envision that the Fed could continue to delay rate cuts in the coming months.As such,we think more attractive opportunities lie further out the curve.Despite the recent shifts,the market could move further to price rate cuts beyond late 2025.By then,

313、the inflation impacts of tariffs will likely have dampened,ceding prominence to any downside growth effects,while a new Trump-appointed Fed chair will likely be an increasingly imminent reality.Valuation considerations and high Treasury term premia also still support the case for US(and European)dur

314、ation as a hedge,even if our benign growth baseline does not argue for a very deep rally from current levels.Kamakshya Trivedi,Head of Global FX,Rates,and EM Strategy Email: Goldman Sachs International Tel:44-20-7051-4005-30-25-20-15-10-505101520-15-10-50510S&P 500Russell2000MSCI EM CAD/USD MXN/USD

315、EUR/USDUST 2yUST 10yFriday Jan 31 close to Monday Feb 3 7amFeb 3-Feb 18Feb 3-Feb 25Right axisLeft axis-4-3-2-10123456Jan-24Apr-24Jul-24Oct-24Jan-25USD/CAD misvaluationEUR/USD misvaluation(inverted)USD TWI misvaluationTariffs&markets:lessons learned so far hEl Goldman Sachs Global Investment Research

316、 22 Top of Mind Issue 136 Daan Struyven assesses how President Trumps quest for US commodity dominance could impact commodity markets Commodities are front and center in Trumps trade and foreign policies as his Administration pursues US commodity dominance,spurred in large part by economic and geopo

317、litical competition with China.Such a paradigm envisions affordable US energy prices,higher US output in the old(e.g.,oil and manufacturing)and new economy(e.g.,power,metals,and AI),and US military and geopolitical dominance.Trump has already taken several steps toward this goal,with tariffs in part

318、icular playing a central role.While we dont expect a significant near-term impact on commodity prices or supply from this commodity dominance agenda,we believe it has the potential to boost US energy/metals production over the longer run.China competition in the drivers seat Economic and geopolitica

319、l competition with China is likely a major driver of Trumps US commodity dominance agenda as the Administration aims to expand the US oil and gas trade surplusa source of geopolitical powerwhile reducing its reliance on imports of several critical metals for which China often dominates the supply ch

320、ain.The US Is a dominant net oil and natural gas exporter,but relies on imports for several critical metals US net import reliance,%of apparent consumption*in 2023 *Net imports plus production.Source:Haver Analytics,EIA,Goldman Sachs GIR.Off to the(commodity)races As part of this agenda,Trump recent

321、ly signed an Executive Order establishing a National Energy Dominance Council within the Executive Branch to advise him on the best policies for making the US energy dominant.Trump has also raised the tariff on aluminum imports from 10%to 25%,removed all exemptions to the 25%tariff on steel imports

322、that he imposed during his first term,and,more recently,directed his staff to launch an investigation into copper imports,which could ultimately lead to tariffs on the metal.The Administration has also floated tariffs on other critical importsincluding energyas well as a universal tariff on all oil

323、and gas imports.While such tariffs remain uncertain,commodity markets continue to price substantial tariff risk premia across copper,Canadian crude oil,and US refined oil products.The copper market Market-implied probability of a 10%tariff on copper,%Source:Goldman Sachs GIR.and Canadian crude marke

324、t are pricing substantial tariff premia Market-implied probability of a 10%tariff on Canadian oil,%Source:Goldman Sachs GIR.Trump has also sought deals with US trading partners to increase US energy exports as well as to expand the US access to critical minerals supplies.On the energy exports front,

325、Trump has urged Europe to buy more US oil and gas as a way to avoid tariffs,signaled a deal with India to buy more US energy and military equipment,and said hes“taking back”the Panama Canala key transit point for US liquefied natural(LNG)and petroleum(LPG)gas.On the critical minerals front,Trump rec

326、ently secured a deal with Ukraine granting the US access to a share of the countrys mineral deposits,although the final details of the deal have yet to be released.Trump has also expressed interest in gaining control of Greenland,which has some critical minerals reserves,and Canadian Prime Minister

327、Justin Trudeau has also suggested that Trumps interest in Canada is related to the countrys supply of critical minerals.-20020406080100-20020406080100120Dec-24Jan-25Feb-25Mar-25020406080100120140Nov-24Dec-24Jan-25Feb-25Higher Tariff PricingTariffs and commodity dominance hEl Goldman Sachs Global Inv

328、estment Research 23 Top of Mind Issue 136 Three takeaways We see three main implications from policy shifts toward US commodity dominance:First,tariffs should raise US metals prices,as we expect significant pass-through from the 25%tariff on steel and aluminum to US end-prices,assuming no significan

329、t exemptions are put in place.Specifically,we estimate that the US Midwest aluminum premiuma delivery premium paid on top of the LME pricewill rise to 50c/lb($1,036/t)by the end of Q1 from an average of 24c/lb($529/t)in January 2025.Second,oil price impacts should remain limited.While Trump has also

330、 floated a 10%oil tariff,we expect the price impact of such a tariff to be more muted as US refiners preference for heavy oil limits any increase in demand for these light crude products,with WTI and Brent crude prices rising by only$0.5/bbl.And while the cost of refined oil products would rise,the

331、magnitude would be modest at around$170 per household per year.The oil price impact of a 10%tariffs on all US oil imports should remain limited 2026 average energy prices under tariff scenarios,$/bbl Source:EIA,Kpler,Goldman Sachs GIR.On net,the US Administrations dual goals of commodity dominance a

332、nd energy affordability reinforce our Brent$70-85 range baseline.We find that Brent prices above$70/bbl support solid growth in marginal US supply as it exceeds most US shale producers breakeven price while Brent prices below$85/bbl keep gasoline prices below$3.50/gallon,the level at which public co

333、ncern about prices begins to rise.1 We have not changed our US LNG exports through 2027 view as financing often requires long-term contracting in addition to approval,the lead time required in construction is long,and we dont view the approval pause as a long run restriction.2 While the Trump Administration may permit the Rio Tinto Resolution mine,the large 500kt per year operation would likely no