Count Barclays among major banks concerned about the read-through for equities of tariff uncertainty and worsening consumer sentiment in the US.

On Wednesday, the bank delivered a fairly large cut to its 2025 year-end S&P price target, which is now 5900, down from 6600 previously.

That’s not a “tweak,” folks. That’s an 11% reduction, and it suggests the bank now expects the world’s risk asset benchmark par excellence to end the year right where it started, not exactly an “exceptional” result, unless of course RoW equities reverse course to trade lower.

That 5900 target’s based on a 22.5x multiple to a base case EPS estimate of $262, which analysts including Venu Krishna marked down from $271.

The bank said there’s “modest upside” versus consensus for big tech earnings growth, which’ll nevertheless slow sharply to 21% YoY versus 37% in 2023/2024, while “weaker consumption, slower overall activity including a hit to ex-US GDP growth, higher inflation and the direct impact of tariffs” spells EPS growth for rest of the index that’s “flat to slightly negative.”

Summarizing their new base case, Barlcays expects higher China tariffs to “stick but not escalate,” and pegs reciprocal tariffs at 5% on the rest of the world. That’ll result in a “material slowing” for the US economy, which “nonetheless stops short of outright recession.” The bank puts a subjective probability of 60% on that scenario.

There’s a 25% chance, the bank said, that pushback from corporates and voters compels Trump to deescalate the trade wars, in which case US equity valuations could revisit their richest levels, driving significant price upside. That’s the bull case.

The bear case is… well, pretty rough, I’ll put it that way. In a worst-case scenario, a full-blown tit-for-tat trade war delivers a veritable body blow to US corporate profits, which would shrink YoY.

The charts on the bottom row, above, show you the estimated EPS impact from a worst-case, both in terms of the direct impact (on the left) and the hit from retaliatory measures (on the right).

Not only would “the full impact of Canada and Mexico tariffs, in tandem with reciprocal and China tariffs,” drag corporate profit growth, “second order effects” would “likely” trigger a US recession, Barclays suggested, noting that the S&P could fall to 4400 in that scenario, down around 30% from last month’s record highs.

The good news is, the bank only assigns a 15% subjective probability to the worst-case outcome.