A new Goldman Sachs study shows that while the majority of tariffs will be paid by consumers U.S. companies will get hit hard too.
Even as American companies are feeling most of the tariff pain right now, that will gradually shift to consumers as the costs of doing business in importing products are passed along to consumers, the new study reported.
Business is “likely bearing a larger share of the costs,” wrote Goldman economists Elsie Peng and David Mercile, “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.
“If recently implemented and future tariffs have the same eventual impact on prices as the tariffs implemented earlier this year, then U.S. consumers would eventually absorb 55 percent of tariff costs,” they wrote. Businesses will end up paying about 22 percent of the tariffs while foreign exporters will shoulder about 18 percent, the report said.
Tariffs are also already driving up inflation, the Goldman report said, contradicting the Administration’s claims otherwise. It projects inflation would be expected to hit 3 percent by December, a full point above the Federal Reserve’s 2 percent goal. Core personal consumption expenditure prices have already jumped 0.44 percent this year due to the president’s tariff agenda, Goldman reported.
There was one caveat on Goldman’s forecasting: given the administration’s constant reversals of trade policies – including recent back-and-forths on a possible 100 percent tariff on China – the ultimate outcome could end up being different for businesses and consumers alike.
