Investing.com –Trade tariffs pose a threat to the global economic outlook, as per analysts at Goldman Sachs. 

In their recent note, the brokerage identifies the potential for widespread tariff increases as a major downside risk for international markets and economic growth. 

This concern is particularly acute in light of ongoing geopolitical tensions and the resurgence of protectionist policies across key economic blocs.

Goldman Sachs warns that if implemented, broad-based tariffs—especially on key trade routes involving major economies like the U.S. and China—could disrupt supply chains and drive up costs for businesses and consumers alike. 

These developments may stifle global trade flows and weigh on corporate earnings, particularly in industries heavily reliant on international supply networks such as manufacturing and technology.

In its 2025 economic forecast, Goldman Sachs projects steady growth for major economies, including 4.5% for China and 2.5% for the U.S. 

However, these projections are underpinned by the assumption that trade tensions do not escalate to the extent of introducing large-scale tariffs. 

The note says that any deviation from this assumption—such as the imposition of new trade barriers—could result in a downward revision of these growth forecasts.

The brokerage also flags the broader market implications of increased tariffs, noting that equity markets could face additional valuation pressures. 

With risk asset prices already reflecting optimistic macroeconomic forecasts, the introduction of punitive trade measures could trigger heightened volatility and dampen investor sentiment globally.