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Goldman Sachs analysts are warning that former President Donald Trump’s potential return to office might lead to slower economic growth if he implements his proposed policies.
According to Goldman Sachs, Trump’s plans to tighten immigration restrictions and impose new tariffs on Chinese imports could result in a reduction of GDP growth by half a percentage point in the latter half of 2025.
Negative Impact of Tariffs and Immigration Policies
Goldman Sachs points out that Trump’s policy proposals are likely to have a more pronounced negative effect on economic growth than any positive impact from fiscal measures.
In a note released on Tuesday, the analysts wrote, “We estimate that whether Trump wins with a sweeping victory or under a divided government, the harmful effects of tariffs and stricter immigration policies would outweigh the benefits of any fiscal stimulus.”
A Trump victory would likely lead to higher tariffs on auto imports from China, Mexico, and the European Union, which could drive up core inflation, according to Goldman Sachs.
Positive Forecast for a Harris Presidency
In contrast, Goldman Sachs predicts a more favorable economic outcome under a Harris presidency with Democratic control of Congress. They argue that spending initiatives and tax credits would “more than offset” any potential impact on investment from an increased corporate income tax rate.
Goldman Sachs also forecasts that if Harris wins the presidency but Congress remains divided, any policy changes would likely be minimal and have a neutral effect on GDP.
Under Harris, Goldman estimates that job growth would be 10,000 jobs per month higher than under Trump, and 30,000 jobs higher than under a Republican sweep.
Joseph Costello, a spokesperson for the Harris-Walz campaign, highlighted Vice President Harris’s dedication to economic growth.
“Vice President Harris has a positive vision for strengthening the economy by supporting the middle class, cutting taxes, lowering costs for families and small businesses, and creating opportunities for all Americans,” Costello said in a statement. “On the economy, the choice this November is clear.”