Goldman Sachs: Trump's Victory In November Could Damage US GDP!
1min read As the U.S. election approaches, the impact of different election outcomes on the U.S. economy has become one of the market's most pressing concerns. Goldman Sachs analyzed this in a report released this week.
Goldman Sachs analysts said that if former U.S. President and Republican presidential candidate Trump were to be elected and able to implement his agenda, the U.S. economy would weaken. However, if U.S. Vice President and Democratic presidential candidate Harris wins the presidency and the Democrats control both chambers of Congress, the U.S. economy would receive the greatest boost.
Goldman Sachs analysts predicted that Trump's crackdown on immigration and his tariff plan would drag down the U.S. gross domestic product (GDP) by 0.5 percentage points in the second half of 2025, with the impact diminishing in 2026.
The firm said that a Trump victory could lead to higher tariffs on car imports from Mexico, the EU, and elsewhere, thereby increasing the core inflation rate in the United States.
We estimate that if Trump wins in a sweep or with divided government, the hit to growth from tariffs and tighter immigration policy would outweigh the positive fiscal impulse, Goldman Sachs analysts wrote.
Goldman Sachs also expects the best scenario for the U.S. economy to be a Democratic sweep, with Harris winning the presidency and the Democrats taking control of both the Senate and the House of Representatives.
The firm said that Harris's spending plans and tax credit policies would far outweigh the impact of higher corporate tax rates on investment. Harris has proposed raising the corporate tax rate to 28 percent.
In 2017, Trump significantly reduced the corporate tax rate from 35 percent to 21 percent in his signature tax cut bill, the Tax Cuts and Jobs Act. President Biden's recent budget proposal also calls for raising the corporate tax rate to 28 percent.
Goldman Sachs also said that if Harris wins the presidential election and Congress is divided, policy changes would be minimal, and the impact on U.S. GDP would be neutral.
The Trump campaign team clearly disagrees with Goldman Sachs' assessment. The Trump team said that the predictors' assessments of the economic impact after Trump's 2016 victory were wrong.
These Wall Street elites would be wise to review the record and acknowledge the shortcomings of their past work if they'd like their new forecasts to be seen as credible, said Brian Hughes, a senior advisor to the Trump campaign.