President Donald Trump’s sweeping trade overhaul has shaken the global order and alarmed economists around the world, stoking widespread fears that his hardline stance on tariffs and trade renegotiations would derail economic growth.
Despite the fears which have remained unabated, analysts at Goldman Sachs say the global economy remains largely unscathed—for now.
In a note released Thursday, the investment bank said it sees “very few signs that uncertainty is taking a toll on activity,” even as Trump continues to upend decades of trade policy with aggressive protectionist moves, including steep tariffs, abrupt deal withdrawals, and nationalist rhetoric that has disrupted long-standing global supply chains.
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Tariffs, Nationalism, and “Liberation Day”
Since returning to the White House for a second term, Trump has moved swiftly to escalate his “America First” economic agenda. He has introduced new rounds of tariffs on key imports from China, the European Union, and Mexico, while threatening to pull the United States out of long-standing multilateral trade frameworks like the WTO. His administration has also canceled trade benefits to countries he accuses of taking unfair advantage of the U.S. market and has demanded one-on-one trade deals on American terms.
One of the most dramatic moments came in April when Trump declared “Liberation Day,” a policy pivot he framed as a move to “reclaim America’s economic sovereignty.” The announcement rattled financial markets as it came with hints of massive new tariffs and stricter foreign investment rules. Economists warned that it would likely trigger retaliation from other countries, increase business costs, and discourage investment.
Business leaders and analysts braced for a slowdown, especially in trade-exposed sectors such as manufacturing and tech. Some companies, anticipating higher import duties, accelerated shipments to the U.S. in a rush known as “front-loading,” which briefly inflated trade volumes. There were also concerns that this artificial bump was masking an underlying decline in economic momentum.
Goldman Sachs Allays The Fears
Contrary to those fears, Goldman Sachs says the data shows no major economic hit. Since late 2024, factory hiring, private investment, consumer spending, and broader activity have all held steady or even strengthened. Forecasts for both second-quarter and full-year GDP growth have been revised upward in key markets, including the U.S., Germany, India, and Brazil.
The bank attributes this resilience partly to the fact that trade-exposed investment accounts for only a modest slice of GDP in most economies—typically between 0.2 and 0.3 percentage points. So even where factory investment has slowed, particularly in emerging markets, the macroeconomic effect has been minimal.
Moreover, global financial conditions have remained surprisingly loose. Interest rates are stable, credit is flowing, and corporate borrowing costs have dipped slightly, aided by strong liquidity. This has made it easier for businesses to secure financing and maintain capital spending plans, even in uncertain times.
“Uncertainty usually bites hardest when financial conditions tighten,” the analysts wrote. “But this year, the opposite has happened. Liquidity has improved, and that’s helped cushion the fallout.”
Trump’s trade policies have undeniably created an atmosphere of uncertainty. Goldman’s proprietary uncertainty index jumped sharply after his re-election and remained elevated through the first quarter of 2025. But the report noted that uncertainty has begun to ease in recent months, partly due to signs that Trump is willing to negotiate new trade deals with allies and rivals alike.
Some businesses have been adapting. While front-loading distorted short-term trade data, Goldman said even after adjusting for those effects, there is little evidence of a drag on investment or hiring. Analysts found no substantial differences in performance between countries that ramped up exports to the U.S. and those that didn’t, suggesting that the impact of uncertainty has been broadly muted.
“While we continue to expect that tariffs will slow activity later this year, we expect this will be mostly driven by the direct impacts of tariffs rather than uncertainty around trade policy,” the report concluded.
Job Gains and Market Highs
Adding to the picture of economic strength, the U.S. posted stronger-than-expected jobs data in June. The economy added 147,000 jobs, and the unemployment rate dipped from 4.2% to 4.1%. The labor force participation rate also edged higher, suggesting more Americans are returning to the workforce despite fears that trade disruptions would trigger layoffs.
Financial markets have responded with optimism. The S&P 500 and Nasdaq hit record highs this week, buoyed by investor belief that Trump’s protectionism may ultimately boost domestic industry—at least in the short term—and by the perception that the worst-case trade war scenarios have not yet materialized.
Still a Long Road Ahead
While the short-term outlook appears stable, Goldman warns that challenges remain. The full effects of Trump’s second-term tariffs are still unfolding, and economists caution that any prolonged escalation—especially if China or the EU retaliates—could eventually weigh down investment, trigger inflation, and erode global growth.
“The uncertainty drag, therefore, appears smaller than feared,” Goldman wrote.
For now, though, the world economy appears to be weathering the Trump trade storm better than many feared.