Torsten Slok, chief economist at Apollo Global Management, weighs in on President Donald Trump’s threat to raise China tariffs, his outlook for the economy, and more at the Barron’s Roundtable.
A new analysis breaking down the process of tariff cost Turns out that at this point American businesses and consumers, rather than foreign exporters, are bearing most of the cost.
Goldman Sachs Economists estimate that as of August, US businesses were bearing a net 51% of the tariff costs, while US consumers were bearing 37% of the burden. They also estimated that 9% of the cost was paid by foreign exporters, and about 3% was attributed to potential tariff evasion.
“Our analysis shows that at this time, U.S. businesses are bearing the largest share of tariff costs because some tariffs were recently implemented and it takes time to pass on prices to consumers and negotiate lower import prices with foreign suppliers,” Goldman economists wrote.
The report said that if newly implemented and future tariffs have the same impact on price as those that have taken effect so far, US consumers will ultimately bear most of the costs.
Fed chair warns inflation is ‘going the wrong way’ as tariff concerns grow
A Goldman Sachs analysis found that American businesses and consumers are bearing most of the costs of the tariffs. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
Goldman economists estimate that by the end of 2025 the U.S. consumers will absorb Tariffs would account for 55% of the cost, while 22% would fall on US businesses, 18% on foreign exporters and 5% on potential tariff evasion.
“Our 22% estimate for U.S. businesses is modest because it is a net effect – companies that use or sell imported goods will bear a larger share of the tariff costs, while domestic producers who are protected from foreign competition by tariffs will be able to raise their prices and increase their margins,” the economists wrote.
The Fed’s preferred inflation gauge shows consumer prices remained high in August.
Tariffs are taxes on imported goods that are paid by the importer, who typically transfers the higher costs to consumers through higher prices and may be able to negotiate lower prices from exporters. (Sam Wolfe/Bloomberg via Getty Images/Getty Images)
The Goldman Sachs report also estimates that tariffs have increased inflation by about half a percentage point so far this year and that this trend is expected to continue in the coming months.
The analysis found that core personal consumption expenditure (PCE) prices are expected to increase by 0.44 percentage points this year and tariff costs are expected to increase by 55% to 70%. core pce inflation It is expected to increase by an additional 0.6 percentage points.
As a result, the analysis sees core PCE inflation in December 2025 equaling 3% year-on-year or 2.2% net of the tariff effect. In December 2026, economists forecast core PCE inflation to be 2.4%, or 2% net of the tariff effect.
Fed’s Miran downplays impact of Trump tariffs on growth, inflation
federal Reserve Policymakers see inflation rising this year as tariff costs have begun to hit the economy and consumer prices, with PCE inflation at 2.7% and core PCE at 2.9% as of August.
These figures are well above the Fed’s 2% target and concerns over the inflationary impact of tariffs on data kept policymakers from cutting interest rates for most of the year, as they moved ahead with a 25-basis-point cut in September amid signs of tapering. labor market,
Get Fox Business by clicking here
The central bank is expected to cut interest rates by 25 basis points at its meeting next week as uncertainty remains about economic conditions.
