Goldman Sachs warns that despite the market's positive reaction to news that Trump may ease tariffs, there are still significant risks. The bank predicts that the tariff rate could be higher than what investors anticipate. The administration plans to implement reciprocal tariffs starting on April 2. The stock market may experience increased volatility as shares surged on the hope of reduced tariffs next month.

Goldman Sachs outlined concerns about a possible negative surprise on April 2 when the White House intends to reveal a range of reciprocal tariffs affecting global trading partners. Although news of more selective import duties initially lifted market sentiment, any tariff changes could have far-reaching consequences. The bank anticipates that the tariff rates for targeted countries might unsettle investors.

Goldman highlighted two factors indicating potential market turbulence before April 2. First, tariffs are seen as a bargaining tool, possibly leading to higher rates to boost negotiation pressure. Second, the discrepancy between market expectations and the actual tariff rates could result in a shock. The bank's research suggests that investors may underestimate the potential tariff rates, setting the stage for unexpected market reactions.

Goldman Sachs draws parallels to previous tariff negotiations with Canada and Mexico, emphasizing the unpredictability and market volatility that can arise. The bank believes that the White House may approach reciprocal tariffs cautiously, considering that the affected trade partners represent a significantly larger import volume than Canada and Mexico.