Investment bank Goldman Sachs has warned that U.S. President Donald Trump's sweeping new tariffs may spike inflation and shrink the economy in coming months to the point of a recession.

Goldman Sachs expects aggressive duties from the White House to raise inflation and unemployment and drag economic growth to a near-standstill. In a note Sunday, the firm said "we continue to believe the risk from April 2 tariffs is greater than many market participants have previously assumed.

Goldman Sachs economists raised their forecast for Federal Reserve interest rate cuts to three this year and increased the probability of a U.S. recession to 35%, as President Donald Trump’s tariffs put pressure on economic growth.