US consumers will soon be footing more than half the bill for President Trump's tariffs, according to a new report from Goldman Sachs economists. Six months after tariffs took effect on everything from copper to cars, the investment bank's analysts estimate Americans will be paying about 55% of their costs by the end of the year, with American businesses absorbing around 22%, Bloomberg reports. Goldman analysts predicted that exporters would shoulder around 18% of the costs by cutting prices, with another 5% of tariff costs evaded.
At the moment, US businesses "are likely bearing a larger share of the costs because some tariffs have just gone into effect and it takes time to raise prices on consumers and negotiate lower import prices with foreign suppliers," the analysts said, per Quartz. The report arrives as inflation, while down from its pandemic-era highs, remains stubbornly above the Federal Reserve's comfort zone. The most recent CPI sits at 2.93%, with another key inflation metric—the Fed's preferred measure—clocking in at 2.7% for August, both higher than the central bank's 2% target. NBC News reports. Analysts say the tariffs have added more than 0.4% to the second measure.
The Trump administration insists the pain is only temporary, with White House spokesman Kush Desai maintaining that foreign exporters and not American consumers will bear the long-term cost. Desai acknowledged that Americans "may face a transition period" while the administration is "laying the groundwork for a long-term restoration of American Greatness."
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The Goldman analysts said businesses may be waiting for the outcome of a Supreme Court hearing on tariffs next month before deciding to raise prices. The analysts warned the proportion of tariffs paid by the consumer could climb to 70% if Trump follows through on threats to add new duties on items like furniture and kitchen cabinets. Their projections did not include Trump's threat to hit Chinese goods with a 100% tariff, though they wrote that "events in recent days suggest large risks."