Goldman Sachs Scraps Recession Call After Trump's Surprise Tariff Pause As Wall Street Marks Strongest Day Since 2008

In a stunning U-turn, Goldman Sachs has officially withdrawn its call for an outright U.S. recession, issued just hours before President Donald Trump stunned markets with a surprise announcement of a 90-day tariff pause for countries that have not retaliated against U.S. trade measures.

The move underscores the immediate and far-reaching implications of Trump's announcement, which caught Wall Street experts off guard.

“We are reverting to our previous non-recession baseline forecast, with GDP growth of 0.5% and a 45% probability of recession." Goldman Sachs chief economist Jan Hatzius wrote in a late day note.

Goldman now sees 0.5% U.S. GDP growth in 2025 and a 45% probability of recession—down from the full recession baseline forecast it published earlier that same day.

The bank still expects three 25-basis-point Fed “insurance cuts” in June, July and September but sees a less dire macro trajectory, thanks to the tariff pause and signs of trade stabilization.

The revised forecast reflects Trump's differentiated strategy: escalate pressure on China while opening a negotiation path for allies who've held fire.

Trump announced a 10% minimum reciprocal tariff for non-retaliating nations; sector-specific tariffs of up to 25% are still expected. He confirmed that tariffs on Chinese imports will be 125%.

Commerce Secretary Howard Lutnick confirmed the scale of the pivot, writing on X that he and Treasury Secretary Scott Bessent were with Trump as he drafted the announcement, calling it "one of the most extraordinary Truth posts of his presidency."

Scott Bessent and I sat with the President while he wrote one of the most extraordinary Truth posts of his Presidency. The world is ready to work with President Trump to fix global trade, and China has chosen the opposite direction. pic.twitter.com/wNvg8NBnSR
— Howard Lutnick (@howardlutnick) April 9, 2025

To reporters outside the White House, Trump was blunt. "Somebody had to do it. It had to stop because it's not sustainable. Last year, China made $1 trillion off trade with the United States. Now I've reversed it."

Trump also floated the idea of tariff exemptions for certain U.S. companies and added that "China wants to make a deal.”

Billionaire hedge fund manager Bill Ackman hailed Trump's maneuver as "brilliantly executed," adding: "Every U.S. company that sources products in China is now finding alternative suppliers. Supply chains are sticky. Tick tock."

Markets Soar In Historic Day

The Dow Jones closed up by nearly 3,000 points to 40,608 points, up 7.9%.

The S&P 500 – as tracked by the SPDR S&P 500 ETF Trust SPY – soared 9.5%, the largest one-day gain since October 2008.

The index surged more than 10% between its intraday low and high—marking the largest single-day swing on record.

The Nasdaq 100 – tracked by the Invesco QQQ Trust QQQ – rocketed 12.2%, also the strongest one-day jump since October 2008.

Magnificent Seven – Daily Gains

NVIDIA Corp. NVDA surged 18.72%, adding $439.87 billion in market cap, closing at $114.33.
Apple Inc. AAPL jumped 15.33%, gaining $397.05 billion, closing at $198.85.
Microsoft Corp. MSFT rose 10.13%, increasing market value by $267.01 billion, closing at $390.49.
Amazon.com Inc. AMZN advanced 11.98%, up $216.66 billion, closing at $191.10.
Meta Platforms Inc. META rallied 14.76%, adding $190.88 billion, closing at $585.77.
Alphabet Inc. GOOG climbed 9.88%, boosting market cap by $175.29 billion, closing at $161.06.
Tesla Inc. TSLA soared 22.69%, gaining $161.91 billion, finishing at $272.20.