Goldman Sachs estimates that US consumers now bear two-thirds of President Trump’s new tariff costs, with more companies planning to pass them on in the future and foreign exporters refusing to absorb the price hikes. The bank expects these measures to lift core personal consumption expenditures (PCE) inflation to 3.2% by year-end, putting pressure on the Fed’s 2% target.
Analysts had expected tariffs to be primarily paid for by foreign companies and consumers, but instead, US individuals are shouldering a larger share of the costs. Despite delays in implementing some tariffs, the regime has already taken effect, with countries like India facing a 25% tariff rate that may double on August 27 as punishment for buying Russian oil.
Goldman Sachs believes that the cost absorbed by foreign exporters will grow over time but remains low. Economist Elsie Peng notes that around 36% of 2025 tariff costs were passed on to consumer prices after three months, and this percentage is expected to increase.
US businesses are also facing increased pressure to pass on tariff-related increases to consumers. The Conference Board’s U.S. CEO Confidence report revealed 64% of firms intend to pass on price hikes, with a further 16% considering it. Goldman Sachs estimates that US businesses have absorbed more than half of the tariff costs so far but that their share will fall to less than 10%.
The impact on inflation is expected to be significant, with Goldman Sachs forecasting an additional 0.5% boost in core PCE price level from August through December. This would leave core PCE inflation at 3.2% year over year in December, assuming an underlying inflation trend of 2.4%.
Source: https://fortune.com/2025/08/11/trump-foreign-countries-eat-tariffs-pass-through-consumers