Goldman Sachs CEO Warns of Economic Uncertainty Amid Tariff Policies, Trading Slowdown

Goldman Sachs CEO David Solomon has warned that the firm is facing a significantly different operating environment as trading activities slow down. In a statement released on Monday, Solomon highlighted the uncertainties brought about by President Trump's aggressive new tariff policies, which have increased the likelihood of an economic recession. He noted that the company's corporate and investment clients are concerned about significant uncertainties in the near and long term, which limit their ability to make important decisions. The uncertainty surrounding future developments and the potential escalation of the trade war poses substantial risks to the U.S. and global economies.

Despite a 15% year-over-year increase in overall profit for the first quarter, reaching $4.74 billion, and a 6% growth in revenue to $15 billion, Goldman Sachs faced a decline in investment banking fee income by 8%. The consulting revenue from helping enterprises with mergers and acquisitions dropped by 22%, falling short of analyst expectations. This decline in investment banking activities indicates a more challenging environment for major financial institutions in 2025.

Solomon's remarks come as other major financial institutions also express concerns about the economic outlook. The trading business was a bright spot for Goldman Sachs, benefiting from market volatility triggered by Trump's initial tariff proposals in February and March. Stock trading revenue surged by a record 27%, with total trading revenue reaching $8.59 billion, marking the best quarter since mid-2009 when Goldman Sachs' revenue exceeded $10 billion.

However, the overall sentiment on Wall Street remains cautious. Last week, signs of pressure were evident as initial public offerings (IPOs) and merger and acquisition transactions were put on hold. Leveraged loan transactions were marginalized, and bond issuances were suspended. This environment of uncertainty and anxiety about the future of the market and the economy is reflected in the conversations with clients, who are grappling with the significant uncertainties in the near and long term.