Goldman Sachs Predicts 90% Chance Of Trump's Tariffs – Here's How U.S. Producers Could Lose Big

Brace yourselves. Goldman Sachs says there's a 90% chance Donald Trump's promised tariffs on Chinese goods are coming, as reported by Business Insider. And if you think U.S. producers will walk away unscathed, think again.

The incoming president has doubled down on a 60% tariff rate on Chinese products – and for good measure, he's tacked on a bonus 10%. It’s a high-stakes game and according to Goldman, this could hit American industries hard in three major ways. Let's break it down.

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1. Higher Costs, Lower Margins

First up, intermediate goods. These are the nuts and bolts (literally, sometimes) that go into making finished products. For most industries, Chinese-made inputs account for just 0.3% of gross output. Not bad, right?

But here's the kicker: In certain sectors – think autos, machine tools, furniture and textiles – Chinese inputs are crucial. With tariffs adding a 20% price hike, profit margins could shrink fast. Goldman says this could dent operating surpluses by 10% to 30%. That's a hefty chunk of change.

For industries already operating on razor-thin margins, this isn't just a speed bump – it's a pothole the size of a crater.

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2. Retaliatory Tariffs Are Coming

Beijing isn't going to take this lying down. If history is any guide (hello, 2018 trade war), China will hit back with its own tariffs. And guess who's caught in the crossfire? U.S. exporters.

Goldman highlights agriculture and forestry as prime targets. Over 60% of export sales in these sectors go to China. Soybeans, wood and even autos are at risk. Farmers and loggers, in particular, could take a major hit. Remember when soybeans piled up in silos during the last trade spat? Déjà vu, anyone?

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3. The Rare-Earth Wild Card

China has another ace up its sleeve: rare-earth materials. The U.S. imports over 70% of key raw materials like graphite and rare-earth compounds from China. Industries like electronics, autos and defense could face serious production bottlenecks without these.

Beijing's already flexing this muscle. In response to recent semiconductor restrictions from the Biden administration, China tightened its grip on graphite exports. If Trump's tariffs roll out, expect more of the same.

So, What's Next?

Goldman's warning is clear: These tariffs could ripple across the U.S. economy, squeezing profits and forcing industries to adapt – or suffer. Producers might want to buckle up as the tit-for-tat trade game ramps up. This isn't just business; it's a financial roller coaster.

Will these tariffs "make America great again" or just make things more expensive? The market will tell us soon enough. Stay tuned.

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