Investing.com -- U.S. equities rallied sharply Wednesday after President Donald Trump announced a 90-day pause on key portions of the proposed “reciprocal” tariffs, reversing escalating recession concerns.
Trump’s announcement, posted on Truth Social, authorized a temporary reduction in tariffs to 10%, excluding China, where tariffs will increase to 125%.
Treasury Secretary Scott Bessent later clarified that the pause applies to all countries except China and excludes sector-specific tariffs, which remain in place.
The policy shift prompted Goldman Sachs to revert its U.S. economic forecast to a non-recession baseline.
“We are reverting to our previous non-recession baseline forecast with GDP growth of 0.5% and a 45% probability of recession,” the firm said.
Less than two hours before Trump's post on Truth Social, Goldman Sachs had raised the probability of a U.S. recession to 65%, citing the enactment of retaliatory tariffs with China and a projected 20 percentage point increase in the effective tariff rate.
The policy reversal eased investor concerns that the economy was sliding into a downturn. Goldman previously warned that a full tariff implementation could lead to -1% GDP growth and a 1.5pp rise in unemployment.
With the pause now in place, the outlook has stabilized — at least for the near term.