Goldman Sachs CEO David Solomon has warned that the United States now faces a greater risk of recession. He linked this growing concern to the recent trade policies under former President Donald Trump, especially the tariffs and wider trade tensions with China.
Speaking to investors and analysts earlier this week, Solomon said that rising uncertainty in the global economy is making it harder for businesses and households to plan. “The prospect of a recession has increased,” he said. “We are seeing clear signs that economic activity is slowing around the world.”
Impact of Trade Policies and Tariff Uncertainty
Last week, Trump announced a 90-day pause on some of the new tariffs. He also decided to exclude some electronics from the list of goods facing higher tariffs from China. While this move gave temporary relief to global markets, Solomon stressed that the broader economic picture remains unclear.
“Yes, the tariff pause is helpful in the short term,” Solomon said. “But it does not solve the bigger problem of ongoing policy uncertainty. We still don’t know how trade rules will evolve in the coming months.”
Solomon said that while the intent to protect U.S. industries and jobs is understandable, America has greatly benefited from global trade. “Few countries gained more from the post-World War II order than the United States,” he said. “We need to be careful not to throw away those gains.”
Strong Financial Results Amid Uncertainty
Despite the warning about a possible recession, Goldman Sachs posted very strong results for the first quarter of the year. The bank earned $4.2 billion in equities trading revenue from January to March, which is a 27% jump compared to the same time last year.
Pre-tax profits also rose 8%, reaching $5.6 billion. These gains were made before the latest developments in the trade war and provide some cushion for the bank in the near term.
Solomon praised the bank’s teams for their performance. “So far, the business is performing very well,” he said. But he also cautioned that continued policy shifts and global tension could weigh down key sectors like lending, stock listings, and mergers and acquisitions.
Economic Uncertainty Threatens Core Business
Goldman Sachs relies heavily on financial activities like lending and underwriting public stock offerings. With global markets showing signs of stress, Solomon noted that the bank is preparing for a more cautious approach.
He said that companies are likely to delay major business decisions. That could hurt investment banks that make money when firms borrow, issue shares, or merge.
“When businesses are unsure about the future, they pause,” Solomon explained. “And when they pause, our business slows down too.”
Broader Economic Concerns
Solomon’s comments echo warnings from other economists and business leaders who are closely watching the effects of trade wars and policy swings.
Many worry that trade fights could lead to higher prices, lower consumer spending, and weaker investment. These are all factors that can pull the economy into a downturn.
The Federal Reserve has also become more cautious. In recent weeks, it signaled that interest rate hikes will likely pause, and policymakers are watching trade talks very closely.
A Call for Balance
Though he acknowledged that some trade reforms may be needed, Solomon urged leaders to act with care. “The global economy is a complex system,” he said. “Disrupting one part can have ripple effects everywhere.”
He urged U.S. policymakers to work with allies to find smarter trade solutions. “Working together often leads to better outcomes than going it alone,” he added.
While Goldman Sachs has strong numbers for now, the road ahead may not be smooth. Solomon said the bank will continue to watch trade policy developments and global economic data closely.
“We believe uncertainty will ease over time,” he said. “But right now, the risk of recession is something we cannot ignore.”