Goldman Sachs CEO David Solomon has warned that former President Donald Trump’s renewed trade policies may increase the risk of a U.S. recession. Speaking during a company call at the start of the second quarter, Solomon highlighted growing uncertainty in global markets. He pointed to rising tariffs and unpredictable policy shifts as key factors slowing economic momentum both in the U.S. and abroad.
Trade Tensions Shake Market Confidence
Solomon stated that the economic environment has changed significantly in recent months. “We’ve entered Q2 in a very different environment,” he noted, referring to the increasing instability caused by trade conflicts.
He explained that signs of slower economic growth are appearing across multiple regions. Investors, according to Solomon, are reacting cautiously to policy uncertainty, which is making it harder to plan long-term investments.
Trump recently paused some planned tariff hikes for 90 days and excluded several types of electronics from duties. While these moves provided brief relief, they did little to restore market confidence.
Temporary Relief Fails to Ease Concerns
Solomon cautioned that the delayed tariffs might not be enough to calm markets. “We don’t yet know how things will unfold,” he said, underlining the unpredictable nature of current trade discussions.
Although Solomon supports efforts to strengthen the U.S. economy, he stressed that America has long benefited from open global trade. “Targeted reforms are more effective than sweeping disruption,” he added.
Solomon’s message was clear: while fair trade is important, abrupt policy changes can harm both domestic growth and international relations.
Strong Earnings Amid Growing Worries
Despite these concerns, Goldman Sachs posted strong financial results for the first quarter. The bank’s equities trading revenue increased by 27%, reaching $4.2 billion. Pre-tax profits also rose 8%, totaling $5.6 billion.
These results reflect market activity before Trump’s renewed tariff rhetoric. According to Solomon, future earnings may face headwinds if trade tensions continue to rise.
“Markets were strong early in the year,” he said, “but renewed policy uncertainty creates challenges.”
Business Activity at Risk as Uncertainty Grows
Solomon warned that sustained trade instability could affect core banking services. “Clients are still active,” he said, “but uncertainty can wear down momentum over time.”
Key areas like mergers, initial public offerings (IPOs), and corporate lending could slow if companies hesitate to make big moves during volatile periods.
He emphasized the importance of stability for long-term growth. Without predictable trade policies, he said, businesses may pause investments or delay major financial decisions.
Solomon concluded with a call for balance. While trade fairness should be a goal, he urged U.S. leaders to consider the impact of aggressive tariffs on businesses, consumers, and financial markets.
He encouraged policymakers to work with international partners and find solutions that promote both competition and cooperation.
With the 2024 U.S. presidential election approaching, trade policy is likely to remain a hot topic. Solomon’s comments highlight the fine line leaders must walk between protecting national interests and maintaining global economic ties.