---
title: "What is the next step in the trade war? Goldman Sachs says \"tariffs are temporary,\" Deutsche Bank says \"the market needs to reprice the trade war risk premium.\""
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/226919291.md"
description: "Deutsche Bank warns that the tariffs cover 44% of U.S. imports, equivalent to five times the scale of all trade actions during Trump's first term, constituting \"the largest trade policy shock since the collapse of the Bretton Woods system.\" The market needs to reprice at least a 1% inflation risk premium, and the real yield on 10-year U.S. Treasuries may break through the 2.5% mark. Goldman Sachs, on the other hand, is optimistic, believing that considering \"the potential economic impact and the conditions set by the White House for tariff removal, the tariffs are more likely to be temporary.\""
datetime: "2025-02-03T06:06:47.000Z"
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  - [en](https://longbridge.com/en/news/226919291.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/226919291.md)
---

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# What is the next step in the trade war? Goldman Sachs says "tariffs are temporary," Deutsche Bank says "the market needs to reprice the trade war risk premium."

There are significant differences on Wall Street regarding the next steps in Trump's trade war. Goldman Sachs is optimistic, believing that the trade war will not have a major impact on U.S. inflation or GDP, as these tariffs may only be short-term measures. Deutsche Bank, on the other hand, holds a more pessimistic view, stating that Trump's tariff measures constitute "the largest trade policy shock since the collapse of the Bretton Woods system."

According to CCTV News, on February 1st local time, U.S. President Trump signed an executive order imposing a 25% tariff on certain products imported from Canada and all products imported from Mexico. Trump also indicated plans to impose tariffs on EU products soon.

There are clear divisions on Wall Street regarding the direction of Trump's subsequent tariff war.

Goldman Sachs maintains a relatively optimistic stance. Goldman Sachs Chief Economist Jan Hatzius stated in his analysis report that **"despite the uncertain outlook, the tariffs on Canada and Mexico 'may be temporary'."**

Analysts noted that considering "the potential economic impact and the conditions set by the White House for lifting the tariffs, the tariffs are more likely to be temporary." Hatzius previously estimated that if a 25% tariff on Canada and Mexico continues, it would raise the effective tariff rate in the U.S. by 7%, leading to a 0.7% increase in core PCE prices and a 0.4% decline in GDP.

In contrast, Deutsche Bank Chief Forex Strategist George Saravelos has a much more pessimistic view.

In a report on Sunday, analysts warned that **the tariffs cover 44% of U.S. imports, amounting to five times the scale of all trade actions during Trump's first term, constituting "the largest trade policy shock since the collapse of the Bretton Woods system."**

Looking at the global trade history post-World War II, the trade volume affected by this tariff action ($1.2 trillion) has surpassed that during the Plaza Accord period in 1985 ($860 billion), with the rate increase exceeding that of the Nixon Shock in 1971. However, unlike historical events, this policy lacks a multilateral coordination mechanism and relies entirely on unilateral enforcement.

Deutsche Bank believes that under the new tariff measures, the North American energy and automotive supply chains face the risk of disruption.

In terms of energy, Canada supplies 3.8 million barrels of crude oil to the U.S. daily, accounting for 56% of U.S. imports. If Canada takes countermeasures (such as restarting the "Keystone XL pipeline ban"), U.S. Midwest refineries will be forced to pay a rail transport premium of $6-8 per barrel.

The automotive industry faces "precise strikes." Mexico supplies 38% of automotive parts to the U.S., and the new tariffs will increase the cost per vehicle for the Detroit Three by $2,200. Ford has urgently initiated plans to shift production at its Michigan plant.

Deutsche Bank's model shows that **if tariffs persist for more than three months, Canada and Mexico will fall into a technical recession, with the economic shock intensity exceeding that of Brexit. Analysts warn that the market needs to reprice at least a 1% inflation risk premium, and the real yield on 10-year U.S. Treasuries may break through the 2.5% mark.**

Saravelos believes that Trump's swift implementation of tariff policies may be reserving leverage for budget negotiations for the fiscal year 2024. According to the "Congressional Budget Emergency Clause," tariff revenues can be directly allocated to federal accounts without congressional approval. Saravelos estimates that the new tariffs could generate about $90 billion in annual fiscal revenue, enough to offset some of the increases in military spending This is indeed a 'fiscal monetization tool' for the White House to bypass the congressional deadlock

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