US consumers will end up paying for more than half of President Trump’s tariffs by the end of the year, according to a note released Sunday by Goldman Sachs economists.
American consumers will shoulder 55% of tariff costs, while US companies will take on 22% and foreign exporters will absorb 18% by slashing prices on their goods, economists including Elsie Peng and David Mericle wrote in the note.
“US businesses are likely bearing a larger share of the costs” as they aim to raise prices gradually, the economists said.
“If recently implemented and future tariffs have the same eventual impact on prices as the tariffs implemented earlier this year, then US consumers would eventually absorb 55% of tariff costs.”
The wide-ranging levies will likely hike the inflation rate to 3% – well above the Fed’s 2% goal – by December, according to the note.
Trump’s tariffs have already pushed core personal consumption expenditure prices – which are used in the Fed’s key inflation reading – up by 0.44% so far this year, the economists wrote.
“The President and Administration’s position has always been clear: while Americans may face a transition period from tariffs upending a broken status quo that has put America Last, the cost of tariffs will ultimately be borne by foreign exporters,” White House spokesman Kush Desai told The Post in a statement.
“Companies are already shifting and diversifying their supply chains in response to tariffs, including by onshoring production to the United States.”
Trump has insisted that foreign nations will eat the bulk of the tariffs. But the import taxes are directly paid by US firms during the customs process.
Foreign companies absorb tariff costs when they slash their prices to remain competitive and hold onto market share.
However, Goldman’s analysis is hinged on a sizable “if,” since Trump’s tariffs are constantly evolving during trade talks with foreign nations.
Most recently, Trump threatened a “massive increase” of duties on China to 100% as he accused the nation of “becoming very hostile” in its rare earth restrictions. Goldman’s latest analysis does not include this new rate on China.
Goldman has already lowered its projected tariff impact from its analysis in August. At the time, it wrote that consumers had absorbed just 22% of tariff costs thus far, but predicted their share would jump to 67%.
Trump blasted Goldman and its CEO David Solomon over the report, which claimed US consumers would end up bearing the brunt of the tariffs once they finished working their way through the economy.
“They made a bad prediction a long time ago on both the Market repercussion and the Tariffs themselves, and they were wrong, just like they are wrong about so much else,” the president wrote in a Truth Social post after the August report’s release.
Economic data has been on hold amid the government shutdown, which entered its thirteenth day on Monday. But some furloughed employees are reportedly being called back to help release September’s inflation report on Oct. 24, nine days after it was initially due.
So far, the Bureau of Labor Statistics has missed its deadline for the release of a highly-anticipated monthly jobs report.
Economists and policymakers have been closely monitoring employment data, especially as some Fed officials cite a slowing labor market to justify further interest rate cuts.
According to the most recently available data, US consumer inflation heated up to 2.9% in August as tariffs started to drive up prices.
