LIVE MARKETS-Will the White House impose a universal tariff?

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WILL THE WHITE HOUSE IMPOSE A UNIVERSAL TARIFF?

Donald Trump takes office as U.S. president on Jan 20 and he might kick off his second term at the White House by imposing higher import tariffs, which could possibly be market-disruptive.

Goldman Sachs economists assign a 40% probability to a universal tariff on all imports, which they consider a "serious risk", but ultimately view as unlikely due to several reasons.

A universal tariff, they say, would come at a big economic cost, including a peak inflation rate of more than 3% and a reduction in GDP growth of up to 1.25 percentage points.

They believe businesses would likely push back against such a move, and that the stock market could fall, possibly even more than what it did in 2019, when Trump cleared fairly modest tariff hikes.

Additionally, Goldman Sachs notes that a universal tariff would not align with Trump's emphasis on bilateral negotiations.

In summary, the bank expects targeted tariffs on specific countries such as China, with higher rates on non-consumer goods, as well as new tariffs on autos, which could negatively impact European exporters.

(Danilo Masoni)

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