Tariff Costs Borne by Consumers Could Triple by Year-End: Goldman Sachs

American consumers have absorbed roughly 22 percent of the costs from President Donald Trump’s tariffs through June, but that is expected to swell to 67 percent by year‑end if the pattern of past levies holds, Goldman Sachs economists said in a note this week.

Businesses have so far carried around 64 percent of the costs, and foreign exporters about 14 percent, according to the analysis led by Jan Hatzius.

By December, Goldman expects businesses’ share to fall below 10 percent and foreign exporters’ share to rise to 25 percent. The bank projects the shift will lift core personal consumption expenditures (PCE) inflation—a key Federal Reserve gauge—to 3.2 percent in December versus 2.4 percent without tariff effects. In June, core PCE inflation came in at 2.8 percent.

In an Aug. 12 statement posted on Truth Social in response to Goldman’s analysis, Trump said tariffs have brought trillions of dollars into the U.S. Treasury and boosted the country’s stock market and general wealth.

The president also said that tariffs have not caused inflation and that most of the burden is being shouldered by companies and foreign governments rather than consumers, saying that Goldman “refuse[s] to give credit where credit is due” and had been wrong in earlier predictions about both the market impact and the tariffs.

Earlier this year, Trump emphasized how duties bring economic gains and help correct foreign trade practices unfair to the United States.

Commerce Secretary Howard Lutnick recently said that the duties could generate around $50 billion per month in revenue.

So far, consumer price data appear to support the administration’s expectation of minimal tariff cost pass-through to consumers, while tariff revenues are at record highs. In July, the headline consumer price index (CPI), a common measure of inflation, stayed at 2.7 percent, although core inflation rose to 3.1 percent—the highest level in five months.

White House press secretary Karoline Leavitt said the data underscored that tariffs are not driving runaway inflation.

“Today’s CPI report revealed that inflation beat market expectations once again and remains stable, underscoring President Trump’s commitment to lower costs for American families and businesses,” Leavitt said in a statement.

“The Panicans continue to be proven wrong by the data–President Trump’s tariffs are raking in billions of dollars, small business optimism is at a five-month high, and real wages are rising.” She noted that inflation has averaged 1.9 percent since Trump took office, with energy prices down year-over-year and staples such as eggs 20 percent cheaper since January.

ING analysts wrote in a note that “many prices will end up rising in time due to tariffs,” though they expect the inflationary effect to be a one-off event. For now, they said, “things looked fairly benign” in tariff-exposed sectors because companies are still absorbing most of the costs. They contrasted today’s conditions with the mid-2022 surge, pointing to cooling rents, lower energy prices, and a softer labor market as offsetting factors.

While the ISM and S&P Global manufacturing surveys suggest some price pressures remain in the pipeline, the National Federation of Independent Business reported on Aug. 12 that many small firms are struggling to pass higher costs to customers, helping keep consumer price inflation in check.

Others say the pass-through is already happening.

“Goldman’s forecast is well-supported by current data and sector-level trends,” Kyle Peacock, founder of Peacock Tariff Consulting, told The Epoch Times in an emailed statement.

“The inflationary effects are already materializing, and the broader implications point to a challenging environment for consumers, markets, and policymakers.” He cited surging beef prices, a 25 percent jump in aluminum building products, and clothing made in Vietnam and China that gets slapped with double-digit import taxes.

Eugenia Mykuliak, founder and executive director of B2Prime Group, called Goldman’s 67 percent pass-through estimate “plausible” given past cycles, warning it could dampen consumer spending if realized. She told The Epoch Times in an emailed statement that, “protected domestic industries might benefit from higher prices—at least, in the short run—so companies with pricing power could be temporary beneficiaries.”

Chad D. Cummings, an attorney and CPA specializing in cross-border transactions, told The Epoch Times in an emailed statement that once companies raise prices to reflect tariff costs, “the new level tends to stick, leaving consumers with a permanent increase in their cost of living even if inflation rates later ease.” He added that shifting from absorbing costs to passing them on could restore margins for importers and benefit protected domestic producers, but would likely pressure consumer-facing sectors and discourage new investment.