SYDNEY—The prospect of a radical escalation in the global trade war in coming days has nearly doubled the probability of a recession in the U.S. economy in the next 12 months to around 35%, according to Goldman Sachs.

Ahead of the Trump administration’s so-called “liberation day” on April 2, which will clarify the extent of U.S. tariff actions and spur likely reprisals from other countries, Goldman Sachs also lifted its forecast for U.S. inflation this year. Goldman said it now expects three interest rate cuts by the Federal Reserve in 2025.