(Reuters) -Goldman Sachs ( GS ) on Thursday trimmed its U.S. recession probability to 30% from 35% for the next twelve months on easing uncertainty around President Donald Trump's tariff policies after the U.S. and China affirmed a trade deal.

Earlier this week, negotiators from Washington and Beijing agreed on a framework covering tariff rates with the deal seeing removal of Chinese export restrictions on rare earth minerals and giving Chinese students access to U.S. universities.

Investors breathed a sigh of relief following the deal and easing concerns of an economic recession, after Trump's "Liberation Day" tariffs on April 2 rattled global financial markets.

Goldman said domestic inflation readings so far - while offering only limited evidence - reflected a slightly smaller impact on U.S. consumer prices from tariffs.

Data on Wednesday showed consumer prices increased less than expected in May, but is expected to rise in the coming months on the back of Trump's import tariffs.

"Broad financial conditions have now eased back to roughly pre-tariff levels... (and) measures of trade policy uncertainty have moderated a bit following steps toward de-escalation," said Goldman, for nudging down its recession forecast.

The Wall Street brokerage also boosted its 2025 U.S. GDP growth prediction to 1.25% from its prior forecast of 1% on a quarterly basis.