Shares of Goldman Sachs (GS 0.96%) tumbled on Thursday. The investment banking giant's stock lost 9.3% as of market close and was down as much as 9.5% earlier in the day. The decline comes as the S&P 500 (^GSPC 1.81%) and Nasdaq Composite (^IXIC 2.06%) had their worst day in years.
President Trump's sweeping tariff announcement has triggered concerns about economic growth and market stability, hitting financial stocks particularly hard.
Tariff shock waves ripple through financial sector
Goldman Sachs, a global investment bank, is feeling the pressure after President Trump's announcement of far-reaching new tariffs on nearly all U.S. trading partners. The extensive package includes a 34% tax on imports from China, 20% on the European Union, and a 10% baseline tax on all countries, representing what economists are calling the most significant disruption to global trade in nearly a century.
The tariffs are now being met with retaliatory tariffs from major partners that will greatly impact the ability of U.S. companies to sell outside the country. World leaders are also openly discussing an economic future that exists outside the U.S. as its leader and central figure.
Goldman Sachs is exposed
Goldman Sachs is deeply sensitive to disruptions in international trade, and market stability and predictability is critical for its business. The bank itself has published research suggesting the tariffs could significantly slow economic growth and increase inflation, potentially creating a challenging stagflation environment. The bank's trading and investment banking revenues could face pressure if corporate activity slows and market volatility persists beyond the initial reaction.
I would exercise caution investing here until we get a clearer economic picture.
