U.S. President Donald Trump’s move to impose new sanctions on Canada, Mexico and China pose risks to the earnings estimates of S&P 500 companies, according to analysts at Goldman Sachs.

Over the weekend, Trump slapped 25% import tariffs on traditional trading partners Canada and Mexico, with Canadian energy products facing a 10% levy. A tariff of 10% was also placed on goods incoming from China.

The tariffs, which are due to come into effect on Tuesday, also stand to spark an escalating trade war, analysts have warned. Canada and Mexico have announced plans to roll out their own tariffs on U.S. goods, while China’s Ministry of Commerce intends to challenge the actions at the World Trade Organization.

Trump officials have not said what exact improvements would need to be seen in stemming the flow of illegal immigrants or the opiate fentanyl into the U.S. in order to remove the tariffs. Trump used these arguments as legal justification for employing economic emergency powers to introduce the levies.

Meanwhile, Trump has said that separate tariffs on the European Union would “definitely happen”, although he did not specify when they would be implemented.

For corporate America, every five percentage point increase in the U.S. tariff rate may wipe about 1% to 2% off of the earnings per share of S&P 500 companies, the Goldman Sachs analysts said in a note to clients.

“If company managements decide to absorb the higher input costs, then profit margins would be squeezed. If companies pass along the higher costs to its end customers, then sales volumes may suffer,” the analysts wrote.

More broadly, economists have suggested the tariffs could cause a period of faster inflation and weaker growth in the U.S., and potentially fuel recessions in Canada and Mexico. Both countries rely heavily on trade relations with their larger neighbor.

Trump has said the measures may lead to some “pain” in the short-term for Americans, but argued it “will all be worth the price that must be paid”.