Trump has pledged to impose 10% tariffs on all US imports including from Europe if he comes to power, raising concerns across global markets.

The Wall-Street brokerage said if the policy comes into effect it could shave off 1 percentage point (pp) from the gross domestic product (GDP) of Europe.

Goldman estimated that each 1 pp fall in ‘sales weighted’ GDP of Europe could erase about 10% of earnings for European companies.

The damage may be partly cushioned by some offsets, for example in the form of relief from a stronger dollar and weaker European currencies. Factoring in the offsets, the brokerage expects a 6-7 pp impact on European earnings per share.

“Top-down, we expect 4% EPS growth in 2025, so the impact would be sufficient to more than ‘wipe out’ growth next year,” Goldman Sachs strategists led by Sharon Bell said.

Market expectations that Trump will regain the White House in November are about 70%, as per Goldman’s estimates.

The odds of a Trump victory have increased following a faltering performance by President Joe Biden in a late June debate and after last weekend’s assassination attempt on Trump.

European utilities and healthcare sectors tend to be the main beneficiaries of rising trade risks, while autos, industrials and financials are likely to be affected, Goldman added.

Bell estimated Trump’s proposed tariff policy could erase 0.5 pp from the US GDP as well.