Despite the Drama, Trade Uncertainty Hasn’t Hurt Growth, Goldman Says

President Donald Trump’s new policies may be upending the global trade order, but so far, they’re not hitting the economy hard, wrote Goldman Sachs analysts.

“There are very few signs that uncertainty is taking a toll on activity,” analysts at Goldman Sachs wrote in a Thursday note.

Even though the analysts had expected Trump’s second term to slow economic activity, the numbers tell a different story. Since late 2024, investment, factory hiring, consumer spending, and broader economic activity have all stayed resilient across major developed and emerging markets.

In fact, growth forecasts for both the second quarter and this full year have actually improved from earlier, more pessimistic calls.

The analysts pointed out that in most economies, trade-exposed investment accounts for a small share of GDP, so the impact may just be “too small to see.”

New factory investment, especially in emerging markets, has dipped, but this accounts for just 0.2 to 0.3 percentage points of GDP in major economies.

The analysts also wrote that uncertainty usually bites hardest when financial conditions tighten. But global liquidity has actually improved since the start of the year, making it easier for businesses to borrow money and invest.

Meanwhile, activity and investment expectations that dipped in April — which coincided with Trump’s “Liberation Day” announcement — have already bounced back on improved tariff news.

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“As such, 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,” they added.

Goldman’s report came as the US posted better-than-expected employment data in June. The economy added 147,000 jobs, and unemployment fell from 4.2% to 4.1%.

Investor sentiment is upbeat, with the S&P 500 and the Nasdaq at record highs.

To be sure, trade policy uncertainty remains high by historical standards, with Goldman’s uncertainty index spiking after Trump’s election. But that uncertainty has eased in recent months as Trump negotiates new trade deals.

Some businesses did rush to ship goods to the US ahead of potential tariffs, a phenomenon known as “front-loading,” which may have helped mask some issues. But even after controlling for that, Goldman analysts found little evidence of an “uncertainty drag” on growth. There were also few differences between economic activities in countries that did and didn’t boost exports to the US this spring.

“The uncertainty drag, therefore, appears smaller than feared,” they wrote.