The financial services giant Goldman Sachs thinks US President Donald Trump’s tariffs could spike inflation.

Goldman Sachs thinks inflation, excluding food and energy prices (core PCE inflation), will hit 3.5% this year, a point and a half higher than the U.S. Federal Reserve’s 2% target, CNBC reports.

That number was at 2.8% in February, according to the Bureau of Economic Analysis.

The financial services firm also thinks economic growth will be weak and unemployment will rise from 4.1% to 4.5%. Goldman Sachs estimates that there is a 35% chance of a recession in the next 12 months, a 15% jump from its most recent forecast.

Trump says this Wednesday, April 2nd, will be “Liberation Day in America,” when he’ll slap tariffs on countries around the world. Tariffs are taxes on imported goods paid for by the importing country.

However, the Trump Administration has sent mixed signals about the severity of those upcoming tariffs.

Goldman Sachs predicts Trump will announce tariffs that average 15% across all US trading partners, though the firm expects “product and country exclusions to ultimately whittle the addition to the average US tariff rate down to 9pp (percentage points).”

In an interview on Sunday Morning Futures earlier this month, Trump refused to rule out the possibility of a recession.

“I hate to predict things like that. There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing, and there are always periods of…

It takes a little time. It takes a little time, but I think it should be great for us. I mean, I think it should be great…

What I have to do is build a strong country. You can’t really watch the stock market. If you look at China, they have a hundred-year perspective, we go by quarters. You can’t go by that, you have to do what’s right. What we’re doing is building a tremendous foundation for the future.”

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