Goldman Sachs offers advice on tariffs to countries scrambling to please Trump
Summary
South Africa, Japan and Saudi Arabia are among the nations that have sought counsel from the Wall Street giant.
South Africa knew tariffs from the U.S. were coming and wanted to figure out how to appease President Trump. So it turned to Goldman Sachs.
Since late February, South African leaders including President Cyril Ramaphosa have held conversations with the bank about trade and improving relations with the U.S., people familiar with the matter said. One piece of advice Goldman gave to the president: consider changing a law, even at the margins, that requires Black ownership of some companies, and another that allows the government to seize property from landowners to address racial disparities.
The land-seizure law, signed by the president in January, has drawn the ire of Elon Musk, a South Africa native, who described it as “racist." Trump described it as “a human rights violation." Goldman advised South Africa that everything comes down to Trump’s feelings.
A spokesman for Ramaphosa said Goldman’s recommendations “would not have found favor with the government, which has committed itself to transformation that seeks to redress the past imbalances of apartheid."
Countries big and small are turning to Wall Street banks for guidance on how to navigate Trump’s global trade war. Bankers have advised that negotiations with the Trump administration could be affected by issues that have nothing to do with trade and might require political or symbolic concessions to the White House.
France and Saudi Arabia are among the other governments that have spoken with Goldman on negotiating with the Trump administration, people familiar with the matter said.
Japan has also consulted with Goldman on how to address Trump’s allegations that its tax system effectively subsidizes exports to the disadvantage of U.S. manufacturers. In talks with the bank, the Japanese government expressed skepticism about changing its tax policies just to please the administration, people familiar with the matter said.
Wall Street’s biggest banks advise corporate clients on all manner of business, from mergers, IPOs and restructurings to major capital projects. They also regularly provide guidance to foreign governments, and talks have accelerated and become more urgent with Trump’s return to the White House.
Some of Goldman’s talks are with countries whose central banks are clients of the firm, including some where Goldman manages their foreign currency reserves.
Kush Desai, a spokesman for the White House, said trading partners that want to strike a deal with the U.S. must “reduce the tariff and non-monetary barriers driving our country’s persistent and historic goods trade deficit. Advice suggesting otherwise from anyone outside of the administration should be considered pure speculation."
An ambassador is expelled
South Africa’s relations with the U.S. have become more strained since Trump became president. A recent South African law lets the government take possession of land in certain cases without compensating owners. The Trump administration said it was an attempt to take property from white South Africans and issued an executive order cutting off financial assistance to the government. It also pledged to help promote the resettlement of white South African refugees who were “escaping government-sponsored race-based discrimination."
After the U.S. expelled South Africa’s ambassador in March, South African officials expressed concerns to Goldman executives about the possibility of punitive tariffs, people familiar with the talks said. Goldman said there is frustration among investors about laws governing what assets can be bought in South Africa and that the land law hasn’t sat well with Trump’s base.
In early April, Trump imposed so-called reciprocal tariffs of 31% on South Africa and included it among the “worst offenders" when it came to unfair trade policies.
Trump later announced a 90-day pause on his reciprocal tariffs. Bank executives privately told clients last week that the pause could be extended on a country-by-country basis if the administration determines there has been enough progress in negotiations.
The Trump administration doesn’t want to publicize trade deals until several can be announced at once, according to bank executives briefed on the matter. U.S. officials plan to roll out a template for tariff negotiations that foresees them negotiating with six countries a week until July, The Wall Street Journal reported.
A flurry of closed-door meetings
Trade negotiations were top of mind at the International Monetary Fund meetings in Washington last week. In a closed-door talk hosted by JPMorgan Chase in front of over 500 investors, Treasury Secretary Scott Bessent said that he expects negotiations with China will take between two to three years and that the goal wasn’t to decouple the two economies, people who attended the talk said.
JPMorgan CEO Jamie Dimon addressed the crowd afterward, and said he believes the best case outcome from the trade war would be a mild recession for the U.S. economy.
On the sidelines of the IMF meetings, Bank of America brought a group of clients to meet with officials in the president’s National Economic Council, people familiar with the matter said.
Vietnam was negotiating with administration officials about lowering reciprocal tariffs from 46%, a person familiar with the talks said. Japan discussed with U.S. officials its exchange-rate policies, which the Trump administration has said are detrimental to U.S. companies.
Write to Alexander Saeedy at alexander.saeedy@wsj.com and AnnaMaria Andriotis at annamaria.andriotis@wsj.com
