Goldman Sachs: Tariffs Pose Key Risk to 2025 S&P 500 Earnings Growth

Goldman Sachs' Chief US Equity Strategist David J. Kostin warns that rising tariffs could weigh on 2025 earnings forecasts for S&P 500 companies. While Q4 2024 aggregate EPS grew by 12% YoY, surpassing expectations of 8% growth, the outlook for next year is clouded by potential tariff hikes and financial tightening.

How Will Tariffs Impact S&P 500 Earnings?

🔴 Projected Tariff Increases

• 10 percentage point (pp) hike on Chinese imports (on top of a prior 10 pp increase).
• 10 pp increase on global critical imports such as semiconductors and EV batteries.
• 25 pp rise on EU auto imports.

🔴 Estimated Market Impact

• These tariffs would raise the effective tariff rate by 4.7 pp.
• Every 5 pp increase in tariffs could cut S&P 500 EPS by 1-2%.
• Industries with global supply chains—Tech, Autos, and Retail—are at highest risk.

🔴 Policy Uncertainty & Consumer Response

• If companies absorb higher costs, profit margins could take a hit.
• If firms pass costs to consumers, demand may slow, especially with inflation already a concern.
• A higher equity risk premium (ERP) due to policy uncertainty could lower fair value estimates.

Goldman Sachs' S&P 500 Outlook for 2025

✅ Despite tariff risks, GS maintains a bullish long-term stance.
✅ Year-end 2025 price target: 6,500 (+7% from current levels).
✅ Market to benefit from earnings resilience and potential Fed easing.

📌 Track S&P 500 Trends with:

• Sector P/E Ratio API - Analyze tariff-sensitive sectors.
• Earnings Calendar API - Stay updated on S&P 500 earnings projections.