U.S. GDP May Rise Slightly Under Harris, Fall If Trump Returns: Goldman Sachs

U.S. gross domestic product (GDP) may get "a very slight boost" if Vice President Kamala Harris wins, and it might take a hit if former president Donald Trump reclaims the White House, according to economists from Goldman Sachs who shared their thoughts on the economic implications of the election results.

Goldman economists, which included Alec Phillips, noted a more positive outcome in the event that Harris win, and Democrats would comprise majority of Congress.

The note from economists explained that country's GDP over 2025-2026 will benefit from new spending and expanded middle-income tax credits that is expected to slightly more than offset lower investment due to higher corporate tax rates.

Goldman economists also wrote about certain points, which they viewed could very well create an impact in the event of a Trump victory.

"We estimate that if Trump wins in a sweep or with divided government, the hit to growth from tariffs and tighter immigration policy would outweigh the positive fiscal impulse," the note stated.

Goldman economists estimate a Trump win could weigh on GDP by as much as 0.5% in the second half of next year. The effect of the hit would only be abating in 2026, Fortune reported.

The economists expect a 20% hike in China tariffs under a Trump administration, coupled with higher duties imposed on auto imports from the European Union and Mexico and reduced immigration, which could slow growth in the labor sector, Reuters reported.

They also laid down what could possibly happen in case Harris secures the White House, but Republicans still control at least one chamber of Congress. They said that "the effects of policy changes would be small and neutral on net."

Goldman reported that there would be a slowdown in immigration in case Harris becomes president since the Biden administration has already taken steps for tighter immigration controls, the number of which would be approximately 1.5 million a year. However, in a Trump administration, the number would be lesser at 1.25 million.

Amid high interest rates, many economists view a surge in immigration has contributed to the strong employment growth in the U.S. in recent years.

"We estimate that the contribution from immigration to labor force growth if Harris wins would be 10,000 per month higher than if Trump wins with divided government," and 30,000 a month higher than if Republicans sweep, Goldman's economists wrote.