The rocket of abundance lifted early hours of today to deliver to the unbounded value of entrepreneurial capitalism across communities, cities and nations, fixing frictions at scale. In senior secondary school, I memorized Prof Lionel Robbins’ definition of economics – a social science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.

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On Monday, Morgan Stanley downgraded Goldman Sachs’ stock from Overweight to Equal-weight and reduced the price target from $659 to $558, citing significant concerns over the bank’s reliance on investment banking revenues, which are highly vulnerable to a downturn.

This downgrade comes as Goldman’s stock has dropped nearly 14% in the past week, with analysts expressing caution over its future performance amid ongoing economic instability caused by President Trump’s escalating tariff war.

The analysts raised concerns that over 60% of Goldman Sachs’s revenues come from its Global Banking & Markets segment, which is particularly exposed to recession risks and market volatility. Investment banking, in particular, has already shown signs of strain, with the tariffs playing a significant role in the mounting uncertainty.

In the wake of President Trump’s global tariff policy, which has led to widespread market concerns, analysts fear that American companies, including major financial institutions like Goldman Sachs, could be severely impacted by rising costs, diminished consumer confidence, and potential market contractions.

As noted by Wedbush analyst Dan Ives, if the tariffs hold at their current levels, they could have devastating effects on the U.S. tech sector, which is a critical driver of the broader economy. Ives stated: “If these tariffs (in current form/rates) hold… it would set the US tech world back a decade in our opinion while China is the clear winner… the US tech supply chain turned upside down overnight and the cost structure will be untenable. Investors know math and the sad reality.”

This statement underscores the growing concerns that Trump’s tariffs will cause severe damage to the U.S. technology sector, a key contributor to the country’s economic strength. As tensions rise between the U.S. and major trading partners, including China, analysts predict that American companies, especially those in high-tech industries, will find it increasingly difficult to maintain profitability. Goldman Sachs, with its exposure to global markets and its reliance on investment banking and trading, is seen as especially vulnerable.

In a research note, Morgan Stanley’s analysts also forecast that Goldman Sachs would fail to meet its internal medium-term return on equity target of 14-16%, projecting only a 12% return on equity (ROE) for 2025 and 13% in 2026. These figures fall below the bank’s targets and suggest potential trouble ahead. Moreover, concerns about the value of Goldman Sachs’s Apple Card portfolio, particularly its exposure to customers with lower FICO scores, have added to the overall sense of unease.

But analysts stopped short of downgrading Goldman Sachs to Underweight, believing that the bank’s Markets division could still benefit from prolonged market volatility, which may drive higher revenues. However, the long-term picture remains uncertain, and the broader risks posed by Trump’s trade war continue to weigh heavily on market sentiment.

The Recession Fears

Trump’s tariffs have sparked fears of a global recession, with analysts warning that the negative impact on trade and global supply chains could push the U.S. economy into a slowdown. The U.S. stock market, which has already been facing volatility, is expected to remain under pressure as companies brace for higher costs and shrinking profit margins.

Experts such as Dan Ives argue that the tariff war is not only undermining the competitiveness of U.S. companies but also disrupting the global supply chain. The overall uncertainty is prompting both investors and corporations to reconsider their long-term strategies, with many now waiting for signs of stabilization before committing to new investments.

“Capital isn’t going to rush to fill that void just because you raised tariffs. It’s going to wait,” Ives added, further underlining the cautious stance taken by the market.

Presently, the U.S. Federal Reserve faces its own challenges in balancing monetary policy, particularly with inflation concerns mounting. This means the impact of the tariffs is expected to be felt in various sectors of the economy. Analysts, including those from J.P. Morgan, have raised the likelihood of a U.S. recession to 60% by the end of the year, with further risks to global economic stability.

Tesla CEO Elon Musk has taken a public swipe at President Donald Trump’s top trade advisor, Peter Navarro, in what many insiders see as a veiled rebuke of the Trump administration’s sweeping new tariff regime, a policy that could further erode Tesla’s already slowing growth.

“A PhD in Econ from Harvard is a bad thing, not a good thing,” Musk wrote Saturday on X, formerly Twitter. “Results in the ego/brains>>1 problem.”

Navarro, 75, who earned his master’s and doctorate from Harvard and currently serves as Trump’s senior advisor on trade and manufacturing, brushed off the insult in a Fox News interview. But behind the scenes, many in Trump’s circle acknowledge that the rift between Musk and the administration may be deeper than they’re publicly admitting.

“Look, Elon, when he’s in his DOGE lane, he’s great,” Navarro said on Sunday Morning Futures. “But let’s understand what’s going on here—Elon sells cars. He’s protecting his own interests, as any business person would do.”

Navarro’s tone was light, but Musk’s criticism came just days after Trump rolled out a sweeping tariff policy that imposes new taxes on imports from more than 180 countries, starting at a baseline rate of 10%. Trump, who announced the measure during a rally on what he called “Liberation Day,” claimed the move would “make America wealthy again” by encouraging U.S. manufacturing.

However, economists warn the policy could do the exact opposite, particularly for American automakers like Tesla, whose global supply chains and export markets are being directly hit by the new duties.

Tesla, which relies on imported parts for its U.S. manufacturing and exports thousands of vehicles from its Gigafactory in Shanghai to Europe and elsewhere, stands to be one of the hardest-hit American automakers under the new tariff regime. Analysts say the policy could sharply raise the cost of key components, reduce competitiveness in foreign markets, and trigger retaliatory measures from other countries.

Tesla has already been facing a tough year. The electric carmaker’s global deliveries fell nearly 8% in Q1, its biggest year-over-year drop since the pandemic. With competition rising in Europe and China, and price wars eating into margins, Tesla is under pressure to show growth again. Analysts have downgraded the company’s stock, pointing to stagnating sales and weak consumer demand in key markets.

Musk, once an enthusiastic Trump backer and currently serving as a “special government employee” under the Department of Government Efficiency (DOGE), has supported the administration on a range of issues, from deregulation to free speech. But the tariff dispute may mark the beginning of a serious ideological split.

Behind the Musk–Navarro Clash

While Musk’s dig at Navarro seemed personal, many believe it’s emblematic of a deeper frustration with Trump’s inward-turning economic policy. The jab was widely interpreted as a public denunciation of the administration’s increasingly populist, protectionist direction—one that Musk believes undermines the very global competitiveness America needs to preserve.

Sources familiar with White House discussions say Musk had warned Trump privately in recent months that the auto sector needed “more open markets, not less,” especially as legacy automakers from China and Europe began flooding international markets with cheaper EVs.

Musk’s push for a “zero-tariff” trade pact between the U.S. and Europe, comments he made Saturday while attending a meeting with Italy’s League Party, also underscores his divergence from Trump’s hawkish stance. He even suggested a freer immigration policy between the two continents.

“If people wish to work in Europe or wish to work in North America, they should be allowed to do so,” Musk said, comments that stand in stark contrast to the Trump administration’s more restrictive posture on labor and immigration.

Though Navarro downplayed the spat, insiders suggest Musk’s jab may mark the beginning of a cooling relationship with Trump’s administration—one that had, until now, positioned Musk as an indispensable outsider-insider. As head of DOGE, Musk was tapped to bring Silicon Valley efficiency to federal operations. Trump, who frequently praises Musk, has said he hopes the tech billionaire stays on “as long as possible.”

But federal law restricts special government employees like Musk to 130 days of service per year, and there are signs that both sides are bracing for a natural, if increasingly tense, conclusion to the arrangement.

“Elon Musk and President Trump have both publicly stated that Elon will depart from public service as a special government employee when his incredible work at DOGE is complete,” White House press secretary Karoline Leavitt said in an X post.

Still, Trumpworld seems eager to keep Musk in the fold. Vice President JD Vance recently said on Fox News that Musk would continue advising the administration even after completing his DOGE assignment. But that loyalty may be harder to maintain if the tariff fallout continues to deepen.

However, for Musk, the battle over tariffs could force a turning point. Once seen as a rare bridge between the tech elite and Trump’s populist movement, Musk now appears caught between his business interests and the administration’s increasingly nationalistic policies.

Time will tell whether his fallout with Navarro becomes a broader split with the White House. However, it is becoming clearer as Tesla struggles to maintain growth that Musk can’t afford trade policies that choke supply chains, inflate production costs, and close foreign markets.