Goldman Sachs chief David Solomon warns of rising U.S. recession risks, linking concerns to Donald Trump’s latest trade policies. Speaking during the firm’s Q1 earnings call, Solomon pointed to growing instability and said markets face a new and uncertain environment.
The comments come as Trump revives his aggressive tariff strategy. While some planned hikes were delayed and electronics got a temporary exemption, Solomon says this pause won’t calm long-term economic fears. “We’re entering Q2 in a very different environment,” he said, warning of slower business activity across the globe.
Trump’s Trade Approach Sparks Fresh Economic Fears
Over the past weeks, former President Donald Trump has taken steps to reintroduce and expand import tariffs as part of his effort to boost domestic industry. Though he has paused some of these measures for 90 days, and excluded select electronic goods, financial leaders say the strategy is already reshaping market sentiment.
David Solomon made it clear during Goldman Sachs’ quarterly earnings call that the return of tariff threats adds serious uncertainty. “We still don’t know how the trade policies will evolve,” Solomon stated. “Volatility is likely to stay with us.”
He stressed that while reforms can help U.S. businesses remain competitive, there is a fine line. “America’s long-term economic strength has come through global cooperation. That’s something we must not overlook.”
Goldman Sachs Posts Record Profits Despite Warnings
Despite these concerns, Goldman Sachs posted strong results for Q1 2025. Equity trading revenues rose by 27%, reaching $4.2 billion. Total pre-tax profit hit $5.6 billion, an 8% year-over-year increase.
Solomon said the firm benefited from active markets and strong client demand. However, he cautioned that if trade instability worsens, even top-performing divisions could be impacted.
“At the moment, client activity is strong,” he explained. “But if the current conditions persist, they could start to dampen growth.”
Ongoing Instability May Hit Core Bank Activities
Solomon warned that continued tariff disputes and shaky market conditions could weaken key financial sectors. Lending, mergers, and initial public offerings (IPOs) are all sensitive to global risk levels. If confidence drops, these areas may slow down significantly.
While Goldman Sachs remains resilient for now, Solomon emphasized the need for a stable trade policy to support long-term business momentum. “Uncertainty makes it harder for companies to plan. That affects investments, jobs, and innovation,” he said.
Trade Policy Faces Mixed Reception
Though Trump’s trade strategy aims to push production back to the U.S., many economists question whether it will deliver the promised benefits. Previous trade wars under the Trump administration caused global supply chain shifts, raised costs for U.S. companies, and contributed to stock market volatility.
Solomon acknowledged the goal of strengthening domestic industry but highlighted that open trade has historically helped the U.S. economy grow. “Targeted updates to trade agreements can make sense,” he said. “But we need to avoid steps that harm global cooperation.”
Markets Watch for Policy Signals
As the U.S. heads deeper into Q2, investors and financial leaders are watching the administration’s next moves. Questions remain about whether further tariffs will be added or if exemptions will be extended.
Solomon urged policymakers to focus on clear and stable frameworks. “The markets can adapt,” he said. “But they need clarity and time to do so.”
David Solomon’s warning underscores the deep ties between trade policy and economic health. While Goldman Sachs enjoys record-breaking performance now, ongoing instability could test the strength of the financial sector.
