Tariffs are viewed as the biggest risk for investors

Goldman Sachs has released a new survey that gauges investor expectations for a second term under former President Trump. The results show a significant concern among investors about tariffs. Investors see high chances for various tariffs. There is a 65% probability for reciprocal tariffs, 59% for auto tariffs, 57% for EU imports, 54% for critical goods, and 47% for imports from Canada and Mexico. The average expected increase in the effective tariff rate has jumped to 8.6 percentage points, up from just 3 points in November. Goldman Sachs predicts an increase of 10 percentage points. On immigration, investors believe that annual immigration may fall to 700,000. This is slightly higher than Goldman’s revised estimate of 500,000. Additionally, many expect that at least 10% of undocumented workers could leave the workforce or the United States. In regards to fiscal policy, investors are forecasting $100 billion a year in tax cuts along with $150 billion a year in spending cuts. However, they anticipate a neutral effect on the national deficit as a result of these changes. Lastly, the macroeconomic outlook has shifted since Inauguration Day. Investors have lowered their GDP growth expectations for 2025 by 0.6 percentage points and raised their forecasts for core PCE inflation by 0.2 percentage points. Overall, tariffs continue to be viewed as the primary perceived policy risk.