New York CNN Business  — 

To Goldman Sachs CEO David Solomon, the current economic environment doesn’t feel like the pre-crisis days of August 2007. But he identifies at least one thing that could cause the economy to go off track: The trade war.

“I don’t think we’re at a moment where there is an impending economic crisis,” Solomon told CNN Business’ Christine Romans during an exclusive interview at the Goldman Sachs 10,000 Small Businesses graduation at the Iowa State Fair. “But look, things could change.”

Solomon acknowledged the trajectory of America’s economy is “slowing a bit” and that the deepening US-China trade war has the potential to cause problems.

“The underlying economy is still doing okay. The chance of a recession in the near term is still relatively low,” the Goldman Sachs (GS) boss said. “But we have to watch what’s going on with tariffs.”

Recession jitters

Others have expressed more concern, especially as global markets experienced turbulence last week due to fears about the trade war.

“We may well be at the most dangerous financial moment since the 2009 Financial Crisis,” former US Treasury Secretary Larry Summers, who was appointed to that post by former President Bill Clinton, said last week on Twitter.

JPMorgan Chase economist Joseph Lupton warned last week that the probability of a US recession over the next 12 months has climbed to 40%.

Billionaire Jeffrey Gundlach sees a 75% chance of a recession prior to the 2020 presidential election. He told Yahoo Finance last week that the US Treasury yield curve, the gap between short-term and long-term bond yields, looks “a lot like 2007.”

But the Goldman Sachs CEO downplayed comparisons with a dozen years ago.

“I don’t see that,” he said. “There is a tendency to look at things through the rearview mirror.”

The next recession, Solomon said, will be “very different.”

Trade war fallout

Nervous investors around the world piled into ultra-safe government debt last week as trade tensions between the United States and China climbed.

The Trump administration has vowed to impose a 10% tariff on $300 billion of Chinese goods by September 1. Some economists have warned that rising trade tensions could hurt the economy by making households and businesses too nervous to spend money.

“At the moment, I think the real impact of tariffs has been small, but you’ll have to watch that carefully,” Solomon said. “Those are the kind of things that can change confidence. And confidence can slow down economic activity.”

The Goldman Sachs boss defended the Trump administration’s desire to rebalance the trade relationship with China.

“I’m not a fan of tariffs, but we need to find a way to push,” Solomon said.

Solomon also pushed back against comments made by Peter Navarro, a senior trade adviser at the White House. Navarro recently said that Goldman Sachs had outsourced jobs and sent factories overseas.

“I saw that. Like a handful of other things I’ve seen him say the last couple of days, I don’t really understand what he’s talking about,” Solomon said.

He pointed out that Goldman Sachs is working to help the real economy, including through programs like 10,000 Small Businesses. The initiative aims to help entrepreneurs by improving access to education, capital and other services.

Is the Fed following Wall Street?

Solomon weighed in on the controversy surrounding the Federal Reserve, which has been repeatedly attacked by President Donald Trump over interest rates.

“It’s very, very important that we have an independent Fed,” Solomon said, echoing comments made last week by the four living former Fed chiefs.

On Friday, Trump argued the Fed has “handcuffed” the US economy. He called for the central bank to slash interest rates by a full percentage point — an extreme move typically reserved for emergencies.

Solomon said that the world has “gotten used to the very, very significant easy money” monetary policy that was used to fight the global financial crisis.

But he worries that the Fed is paying too much attention to the noise.

“Monetary policy, to me, seems a little bit more attached to markets at the moment. And also politics,” Solomon said. “I don’t think that is healthy.”