Economic uncertainty and geopolitical risks are raising concerns among chief executives and global investors. Goldman Sachs, in its Wealth Management Investment Strategy Group’s 2025 outlook for investors, identified the potential of a trade war between the United States and China, the ongoing Russia-Ukraine War, various conflicts in the Middle East, North Korea’s increased nuclear weapons capabilities, cyber threats and terrorism as key risks.
During an online gathering of YPO members on 23 April 2025, Goldman Sachs Vice President Rob Hunter adds, “But the main risk everyone’s talking about in recent days and weeks is the tariffs.”
He says current U.S. tariffs could surpass historical highs, but implementation remains uncertain. A geopolitical strategist on Goldman Sachs’ tactical asset allocation team and a member of the firm’s Wealth Management Investment Strategy Group, the former Marine and National Security Council adviser brings valuable experience from the Middle East to the boardroom.
Joining Hunter was Michael Murdoch, who joined the Investment Strategy Group in 2015 and focuses on strategic and tactical asset allocation for Goldman’s clients.
Hunter says the policy uncertainty around the tariffs is reflected in the economic indices, leading to tightened financial conditions, adding that the business community recently has become more vocal in expressing a need for more certainty from the administration.
Murdoch and Hunter acknowledge that the tariffs come with more questions than answers. The goals of the U.S. tariffs are focused on national security, Fentanyl, reshoring supply chains, reducing trade deficits and strategic competition with China, Hunter explains, adding, “The real question is whether any interim deals they reach on a reasonable timeline satisfy (U.S. President Donald) Trump, and will it calm markets?”
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Murdoch and Hunter addressed the chief executives’ questions, including about the role Congress plays in the long-standing checks and balances of the U.S. government.
Acknowledging that this Congress is unlikely to challenge the president, Hunter points out the political fallout faced by those who did during his first term.
“Republican primary voters, particularly, have made it clear they support Trump’s policies,” Hunter says. “Given the very tight margins in Congress, we should not expect this Congress to get involved in these policy issues.”
Tariffs are not the only risk
While Murdoch and Hunter advise investors and chief executives to remain positive on the markets and global economy overall, they identify several risks.
China’s expanded manufacturing exports are pressuring global markets, leading to global reactions to avoid overcapacity and “dumping” concerns. Military escalation by China toward Taiwan and the South China Sea is a low risk in the short term, but growing, Hunter warns. Cyber threats from China are an ongoing problem, as is the uncertainty around Russia-Ukraine ceasefire prospects and the escalating fears given Iran’s nuclear capabilities.
The financial markets are pricing in less than a 50% probability of a recession as of the call, but, Murdoch advises, the market anticipates weakness followed by recovery and strength. The tariffs, he adds, could push core inflation to nearly 4% this year, much higher than the 2.1% the group forecasted before the tariff announcements.
Then there is the geopolitical rivalry between the U.S. and China when it comes to AI, specifically around export controls on advanced chips, technology sharing policies and access to critical infrastructure and minerals.
Finally, the pair acknowledges the risks to the markets if the U.S. were to retreat from its role as a global leader.
There is good news
Murdoch says the current market and geopolitical uncertainty have not threatened the U.S. dollar’s place as the dominant global reserve currency.
“The U.S. dollar has been the dominant currency for 75 years, and despite some diversification across a range of currencies, there’s no singular standout,” he says. “It’s not just for the reserves, though. There is a great benefit for one primary currency used globally.”
He points out that about 70% of foreign currency debt is denominated in U.S. dollars, about 89% of currency pair transactions are in the dollar, 77-99% of trade invoicing outside the Eurozone is done in dollars, and most key commodities are still quoted in dollars.
Murdoch notes that despite recent volatility and some capital outflows, the U.S. dollar remains well-positioned, pointing out that China’s capital account is still relatively closed, and Europe faces recurring issues like sovereign debt crises. Despite these short- and mid-term risks to markets and global stability, Hunter and Murdoch offered the CEOs reasons for patience and staying the course. The long-term strategy still wins, and they emphasized, the U.S. market enjoys a track record of resilience.
“We’ve developed investment themes centering on U.S. preeminence and staying invested, and we believe those themes remain valid,” Hunter says.
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