Goldman Projects US Consumers to Bear Majority of Trump Tariffs Costs
Americans are poised to endure significant financial repercussions due to President Donald Trump’s tariffs, according to economists from Goldman Sachs Group Inc. Their recent analysis indicates that US consumers will likely bear 55% of the total costs associated with these tariffs by year-end.
Analysis of Tariff Costs
Goldman Sachs released their findings in an October 12 report, highlighting the distribution of tariff burdens. The breakdown is as follows:
- US Consumers: 55%
- American Companies: 22%
- Foreign Exporters: 18%
- Evaded Tariffs: 5%
Initially, American businesses will absorb a greater share of the costs as they take time to adjust prices. However, if the recent and upcoming tariffs affect prices similarly to earlier ones, consumers will gradually shoulder more of the burden.
Impact on Inflation
According to Goldman economists Elsie Peng and David Mericle, US tariffs have already increased core personal consumption prices by 0.44% this year. They project these tariffs will push inflation to about 3% by December.
Trump’s Trade Policy
Trump’s administration aims to rectify trade imbalances and promote domestic manufacturing through a series of tariffs and trade restrictions. Although Trump has claimed that other nations bear the brunt of these costs, the reality is that American importers pay the tariffs imposed by Customs and Border Protection. This, in turn, leads to increased prices for consumers as companies pass on these costs.
Foreign Market Adaptations
Foreign firms often respond to tariffs by lowering their prices to maintain market share. This strategy allows them to absorb some of the costs associated with the tariffs while remaining competitive.
Future Risks and Predictions
Goldman Sachs’s report does not currently factor in Trump’s threat to increase levies on China to 100%. Analysts caution that this development could significantly alter the tariff landscape. They noted, “While we are not assuming any changes to tariff rates on imports from China, recent events suggest considerable risks.”
Despite past criticisms from Trump towards Goldman Sachs and its predictions, the economists continue to provide insights into the evolving impacts of current and future tariffs on the US economy and consumers.
