Goldman Sachs (GS) saw its stock plummet 7.13% in Friday's pre-market trading, as the banking sector faced a widespread selloff amid growing economic concerns. The investment banking giant's decline is part of a larger trend affecting financial institutions, with many major banks experiencing significant drops in their stock prices.

The selloff in bank stocks appears to be triggered by multiple factors, chief among them being President Donald Trump's announcement of new, far-reaching tariffs. These tariffs, which were higher than many Wall Street analysts expected, have exacerbated ongoing worries about weak economic growth and the possibility of a recession. While banks are not directly impacted by tariffs, the businesses and customers they serve are facing higher costs, potentially leading to reduced loan demand and increased delinquencies.

For investment banks like Goldman Sachs, the economic uncertainty poses additional challenges. A weaker economy could hurt merger and acquisition activity, as businesses may cut back on investments due to trade policy uncertainties. This could significantly impact Goldman Sachs' profitability, given the substantial fees it derives from such activities. Furthermore, falling equity markets may lead to diminished revenue from asset management fees and reduced stock trading volumes, affecting the firm's overall performance. As investors reassess the outlook for financial stocks in light of these developments, Goldman Sachs and its peers may continue to face pressure in the near term.