Uncertainty regarding the direction of Washington's trade war with China and the potential impact that new tariffs have on growth is not positive for financial markets in general, according to the top equity strategist at Goldman Sachs, as reported by CNBC

On Monday, President Donald Trump's administration announced it will impose 10% tariffs on $300 billion of Chinese imports, effective next Monday, Sept. 24. By the end of the year, those duties are set to rise to 25%, said Trump in a statement. In an interview with CNBC's "Street Signs" on Tuesday, Goldman analyst Peter Oppenheimer indicated that retaliatory measures from Beijing could hit industry components, disrupting supply chains and weighing on red-hot technology stocks. 

Expect Lower Market Returns, Profit and Margin Growth Over Next Year, Says Goldman 

Oppenheimer indicated that since it was understood that there would be levies on $200 billion worth of Chinese imports, the question on the Street prior to Washington's recent announcement was the size of the tariffs. Since the amount is actually less than investors were fearing, the Goldman analyst indicated that new levies are already priced into stocks. Now, the main question surrounds retaliation from Beijing. 

Since a direct trade effect on GDP should be "very small," Oppenheimer told CNBC, the market will be focused on the second round effect, including what the trade war "does to confidence, sentiment, investment decisions and so on." This should create more volatility, uncertainty and higher risk premiums on risky assets, said Oppenheimer. 

If the Chinese retaliate and Trump retaliates again by imposing tariffs on nearly all imported goods from China, the Goldman equity strategist expects inflation to rise. Although a small amount, after a nearly decade-long bull market, higher costs "could feed into inflation and interest rate expectations," he added. 

Retaliatory tariffs pose a threat to the global supply chain, particularly for U.S. tech stocks that have driven the bull market, stated Oppenheimer. 

“The target may be technology companies that have been the main driver of the equity bull market that we have seen in the U.S. and beyond,” the strategist told CNBC. 

He added that Goldman analysts view additional factors which they believe will "damn" market returns, and lower profit and margin growth over the next year "pretty much everywhere."

He recommends that investors balance returns in risky assets and be overweight in cash, stocks, and commodities, while underweight in government bonds and other credit. Oppenheimer also noted that emerging market stocks and currencies are "beginning to look cheap."

On Tuesday, Reuters reported that the Chinese commerce ministry said in a statement that it will institute tariffs on U.S. goods worth $60 billion starting Sept. 24. Foreign Ministry spokesman Geng Shuang later told a news briefing that the new developments add uncertainty to talks between the countries and that "everything the United States does not give the impressive of sincerity or goodwill."