What investors expect from Trump

Donald Trump is set to take office in a month and a half. So what are investors expecting from the second Trump administration? I'm Alison Nathan, and this is Goldman Sachs Exchanges. Here with me today is David Mericle, chief US economist with Goldman Sachs Research. David, welcome back to the program. Thank

you very much, Allison.

So, obviously, we've seen a very positive market reaction post the election of Donald Trump, at least in US equities. But here at Goldman Sachs, we took the initiative to actually try to survey investors to see what they are expecting. So before we get into the findings of that survey, talk to us a little bit about the survey, how you made it, who did it go to. Give us some details. Sure.

So we have our own policy expectations for what might change under the second Trump administration. But we wanted to understand what are investors thinking, what assumptions underlie market pricing. And so in conjunction with our marquee team, we surveyed over 500 people, and we asked them about the whole range of issues that we think are most macroeconomically significant, immigration policy, trade policy, and fiscal policy, to try to get a sense of, are they looking for more or less the same policy changes as us, or where might views differ?

And so what are investors most nervous about in that survey?

So we actually asked this question, which of the potential policy changes worry you the most in terms of their macroeconomic consequences for 2025? The runaway winner with 60% of the vote was the prospect of a universal 10 or 20% tariff on all goods from all countries. That's not our baseline. It's not most investors' baseline either, but that was cited as the top risk. Other big risks which came in quite a bit lower on the ranking were concerns about fiscal sustainability being triggered by some sort of fiscal move or concerns about deportations of unauthorized immigrants having a negative ef

Trump already announced 25% tariffs on all imports from Mexico and Canada. I don't think we were expecting that. Were investors expecting that or they might be nervous about the universal tariff? Are they actually expecting a universal tariff?

No. So we asked 2 questions. 1st, what was your baseline expectation for the combination of tariffs we might see? And second, what probability do you put on that universal tariff? Most investors are looking for basically what we're looking for, some additional tariffs on imports from China and some additional imports on autos because autos, as we've seen in the recent election, is a very politically sensitive industry. There is a substantial minority of investors who said that their baseline also includes some version of the universal tariff, all goods from all countries, but that was not the

Even that 25% announcement was unexpected and important.