Goldman Sachs reports that U.S. consumers currently absorb two-thirds of President Trump's new tariff costs. Predictions indicate rising core PCE inflation reaching 3.2% by year-end, putting additional stress on the Federal Reserve's 2% inflation target. Initial assumptions that foreign exporters would bear the tariff costs have proven optimistic, as most analysts expect U.S. consumers to ultimately foot the bill. Delays in implementing tariffs aimed to negotiate with foreign trading partners, successfully lowering tariffs with certain countries but allowing for significant hikes for others. Foreign exporters are expected to gradually absorb some tariff costs, but the impact on U.S. consumers remains predominant.
Goldman Sachs estimates that U.S. consumers now shoulder two-thirds of President Trump's new tariffs, with expectations of rising core PCE inflation due to these measures.
The initial expectation that foreign companies and consumers would absorb tariff costs has proven to be overly optimistic, as U.S. consumers face the brunt of the burden.
Analysts indicate that while tariffs have not yet significantly affected inflation, the costs are expected to ultimately be passed down to U.S. consumers.
Goldman Sachs anticipates that the increase in tariff costs will lift core PCE inflation to 3.2% by year-end, intensifying pressure on the Federal Reserve's 2% inflation target.
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