Prediction markets currently indicate approximately 70% likelihood of Donald Trump securing a second presidential term,trump coin price prediction 2026 prompting Goldman Sachs (NYSE:GS) economists to evaluate potential transatlantic economic consequences.
The cornerstone of Trump's proposed trade policy - a blanket 10% tariff on all US imports - could trigger measurable macroeconomic effects. Goldman's modeling suggests this protectionist measure might depress Eurozone GDP growth by a full percentage point, while creating a 0.5 percentage point drag on US economic expansion.
European corporate earnings face particular vulnerability, with each percentage point decline in sales-weighted GDP potentially translating to 10% erosion in EPS. The bank notes that multinational corporations' diversified revenue streams could provide partial mitigation, alongside potential countervailing factors including dollar appreciation and possible US fiscal stimulus measures.
"Current market concentration in Europe's high-quality large caps offers some insulation," Goldman analysts observed, pointing to the relative resilience of blue-chip defensive stocks during previous trade tensions.
Aggregating these factors, the institution forecasts 6-7 percentage points of downward pressure on European earnings per share - sufficient to potentially nullify 2025's growth projections if implemented abruptly.
Historical patterns from the 2018-2019 tariff episodes reveal distinct market reactions: Emerging Markets bore the brunt of underperformance, particularly China-exposed sectors, while European markets demonstrated varied resilience. Germany's export-oriented economy proved more susceptible than France's, with defensive UK markets showing relative stability.
Sectoral analysis identifies clear winners and losers in trade conflict scenarios. Utilities, Healthcare, and the GRANOLAS (Europe's cluster of premium large-cap stocks) typically demonstrate defensive characteristics. Conversely, cyclical sectors including Automotive, Industrial Goods, and Financial Services face disproportionate headwinds, particularly for firms with substantial Chinese market exposure.
Goldman Sachs has adjusted its European sector recommendations accordingly, maintaining underweight positions in Automotive and Chemicals while favoring Healthcare, Telecommunications, and Media. The firm recently established long positions in European Defense stocks, reflecting anticipated policy shifts under potential new US leadership.
While election uncertainty persists, the analysis underscores the importance of portfolio positioning for potential trade policy volatility. Investors may consider rebalancing toward sectors with demonstrated resilience during previous protectionist episodes, while maintaining vigilance regarding policy implementation timelines and potential compensatory measures.
