Trump’s tariffs could offset benefits of US tax cuts — Goldman Sachs

As Republicans advance their budget package through Congress, hopes for an economic and market boost are rising. However, Goldman Sachs warns that new tariffs on imports could negate the positive impact of proposed tax cuts and spending measures, according to a note by economists led by Jan Hatzius.

After Donald Trump’s election in November, markets rallied on his proposed policies to stimulate growth in America's economy, which include tax cuts and deregulation. Yet those gains were quickly overshadowed by his administration’s tariff policies.

While recent trade negotiations and a new budget bill, featuring tax cuts and fiscal stimulus, have fueled optimism, Goldman Sachs stresses that tariffs’ drag on the economy may outweigh these benefits.

That said, the bank noted that more aggressive tax deductions or earlier federal spending cuts could still improve the outlook.