The tariff policy is dragging down the US economy. Morgan Stanley and Goldman Sachs simultaneously lower their growth expectations.

Note that both Morgan Stanley and Goldman Sachs have lowered their growth forecasts for the US economy, attributing the reasons to the impact of tariff policies. Morgan Stanley has cut its forecast for US economic growth in 2025 from the previous 1.9% to 1.5%, and in 2026 from 1.3% to 1.2%. Morgan Stanley believes that tariff policies will slow economic growth this year and push up inflation, putting pressure on the Federal Reserve to control rising prices. Morgan Stanley maintains its forecast of only one interest rate cut by the Federal Reserve this year, with a cut of 25 basis points, likely to occur in June. They also point out that market expectations for three interest rate cuts this year are too optimistic. Morgan Stanley added that they expect two more rate cuts starting in 2026, lower than market expectations. Goldman Sachs has also lowered its forecast for US economic growth in 2025 from the previous 2.2% to 1.7%, and raised the possibility of an economic recession in the next 12 months from 15% to 20%. They also list tariff risks as the main reason for the downward revision in their forecast.