Goldman Sachs has cut its S&P 500 (SP500) target for the second time this month as its economists raised their projection of a U.S. recession to 35%. 

“Higher tariffs, weaker economic growth, and greater inflation than we previously assumed” prompted Goldman to cut its year-end view to 5,900 from 6,200 for the benchmark (SP500), Chief U.S. Equity Strategist David Kostin said in a Sunday research note. The new outlook is ~2% higher from the index’s close Friday at ~5,581. 

“If the growth outlook and investor confidence deteriorate even further, valuations could decline much more than we forecast,” Kostin said. 

Economists at Goldman now see the average U.S. tariff rate rising to a 15% average this year from a previous 10% view. “Almost the entire revision reflects a more aggressive assumption for ‘reciprocal’ tariffs,” Goldman Sachs Chief Economist Jan Hatzius said in a separate note dated March 30. 

Goldman bumped up its 12-month recession probability to 35% from 20% and sliced down its 2025 GDP projection to 1.0% from 1.5% on a Q4 basis.

“The upgrade from our previous 20% [recession] estimate reflects our lower growth baseline, the sharp recent deterioration in household and business confidence, and statements from White House officials indicating greater willingness to tolerate near-term economic weakness in pursuit of their policies,” Hatzius said. 

The Trump administration plans to announce reciprocal tariffs on April 2. 

In Monday trade, U.S. stocks (SP500)(NYSEARCA:VOO)(COMP:IND)(DJI) fell, with the Nasdaq (COMP:IND) off about 2% in morning action.