American shoppers will cover 55% of tariff expenses, according to Goldman Sachs economists.

Consumer Impact of Trump’s Tariffs

A recent report from Goldman Sachs indicates that U.S. consumers will take on over half of the costs associated with President Trump’s tariffs by the end of this year.

According to economists, including Elsie Penn and David Mericle, U.S. consumers are expected to bear about 55% of these tariff costs, while U.S. businesses will account for 22%, and foreign exporters will absorb the remaining 18% by reducing their product prices.

It appears, as the economists suggest, that U.S. companies may face a greater burden, especially as they work to gradually raise prices. There’s a possibility that if the newly imposed tariffs affect prices in a manner similar to earlier tariffs, consumers will indeed cover around 55% of the costs.

This widespread tariff implementation may push inflation to about 3% by December, surpassing the Federal Reserve’s target of 2%. Already, tariffs this year have increased core consumer prices—an important measure of inflation—by 0.44%.

In response to the findings, White House Press Secretary Khush Desai reiterated that while the transition might be challenging for Americans, the ultimate burden of tariffs is meant to fall on foreign exporters.

Desai further pointed out that businesses are altering their supply chains and even moving production back to the United States due to these tariffs.

While Trump asserts that most tariff costs will be borne by foreign nations, the reality is that the initial payment of import taxes falls directly on U.S. companies at customs.

Foreign entities typically adapt to these tariffs by reducing prices to keep their competitive edge and maintain their market hold.

However, this analysis from Goldman is filled with “what if” scenarios since Trump’s tariffs are continually shifting amid ongoing trade talks. Recently, he accused China of becoming “very hostile” regarding rare earth regulations and hinted at increasing tariffs on China up to 100%. Goldman’s report does not take this potential adjustment into account.

Goldman has already updated its forecast on the tariff situation. In previous assessments from August, it noted that consumers had absorbed only 22% of the costs, but expected that number to rise dramatically to 67%.

Trump responded critically to Goldman and its CEO David Solomon, arguing that their predictions about tariffs—and their impact on the market—had consistently been off the mark.

As the government shutdown enters its 13th day, the release of economic data has stalled. Still, there are reports that some furloughed workers will be called back to issue the overdue September inflation report, now set for October 24, a delay of nine days.

Additionally, the Bureau of Labor Statistics has yet to publish its monthly employment report, leaving economists and policymakers eager for data, particularly as some Fed officials have noted a slowdown in the labor market, which could lead to further interest rate reductions.