In a recent briefing, Goldman Sachs analysts discussed the potential effects of U.S. President Donald Trump's tariffs on Asian markets. According to their analysis, the impact of these measures may be less negative than anticipated.
Impact of Tariffs on Market Forecasts
Goldman Sachs analysts suggest that although tariffs may have a lasting impact, they could simultaneously enhance investors' outlook. According to the analysts, 'The fundamental growth impact may not be as negative as markets feared in early 2Q and the actual tariff announcements may serve as a risk-positive ‘clearing event’, even if the rates imposed are somewhat above current baseline expectations.'
Uncertainties and Market Influence
The analysts noted that it is the unpredictable policy rather than the tariffs that have unsettled investors. 'Market performance has been impacted significantly by uncertainty regarding the level of tariffs that may be imposed and the frequent changes to the policy outlook,' they wrote.
Sectoral Differences in Tariff Impact
They also cautioned that the burden of tariffs will vary significantly across geography and sector. Markets in Taiwan, South Korea, and Japan face the greatest share of US-linked revenues, while economies in Southeast Asia and sectors focused on domestic demand, such as utilities and banking, are comparatively less affected. Yet potential downsides remain; Goldman Sachs estimates that each 5-point tariff hike could trim corporate profits by about 1%.
Goldman Sachs' analysis highlights the complexity of Trump's tariffs on Asian markets. Despite potential adverse consequences, the need for a transparent and consistent policy could encourage more active investments.
