Economist reiterates view that consumers will bear the brunt of trade measures
Goldman Sachs is standing by its projection that US consumers will ultimately bear most of the costs from president Donald Trump’s new tariffs, despite sharp public criticism from the White House.
Speaking on CNBC’s “Squawk on the Street” Wednesday, Goldman Sachs economist David Mericle said, “We stand by the results of this study.” He explained that if recent tariffs follow the same trend as those imposed earlier this year, “by the fall, we estimate that consumers would bear about two-thirds of the cost.”
The remarks came a day after Trump posted on Truth Social that Goldman CEO David Solomon should “get a new Economist” or resign.
Goldman’s forecast and inflation impact
The bank’s latest analysis, led by economist Elsie Peng, estimates that consumers paid 22% of tariff costs through June, a Fortune report noted. By year-end, that figure could climb to 67% as businesses pass more expenses to shoppers and supply chains adjust.
Peng’s note projects the personal consumption expenditures (PCE) price index—excluding food and energy—will rise to 3.2% in December. The Federal Reserve’s target for inflation is 2%. Core PCE inflation stood at 2.8% in June.
“If you are a company producing in the US who is now protected from foreign competition, you can raise your prices and benefit,” Mericle said.
Businesses prepare to pass on costs
While exporters have so far absorbed a small share of the tariffs—around 14% in June—Goldman predicts that share will increase to only 25% by October. US businesses, which have absorbed more than half of tariff costs to date, are expected to reduce their share to less than 10% as they raise prices.
A Conference Board survey last week showed 64% of US CEOs plan to pass the tariff costs to consumers, with another 16% still deciding. This is higher than the 45% reported by the New York Fed in June.
Mixed inflation data, Fed rate cut pressure
The Bureau of Labor Statistics reported Tuesday that overall consumer inflation held steady at 2.7% in July, but the core measure rose to 3.1%, the highest since February. Principal Asset Management’s Seema Shah said tariff impacts on prices could grow once pre-tariff inventories are depleted.
An NBC News report noted that some economists warn the US is edging toward stagflation—a combination of slowing job growth and rising prices. Federal Reserve chair Jerome Powell has said the persistence of tariff-related inflation remains uncertain, making interest rate cuts a complex decision.
Goldman’s Mericle also noted that while the tariff effects are still unfolding, “most of the impact is still ahead of us.”
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