Goldman Sachs recently doubled down on its forecast that tariff costs. Despite former President Donald Trump’s denunciation, they think consumers will pay for two-thirds of these costs. In fact, in a recent post on Truth Social, Trump attacked Goldman’s economist. He recommended that CEO David Solomon either hire a different economist or consider resigning himself. This very public outburst comes on the heels of Goldman’s modeling work that predicts serious consumer price impacts from the proposed tariffs.
Goldman Sachs released detailed analyses predicting consumers will end up shouldering about 2/3 of the costs. According to David Mericle, a leading economist at the firm, these models indicate that the financial burden will primarily fall on consumers as the effects of tariffs unfold. Goldman projects that this pattern will be on display more fully by the fall.
Beyond that, Mericle emphasized Goldman’s unbounded confidence in its research. He doubled down, saying, “We are standing by the results of this study” during an appearance on CNBC’s “Squawk on the Street.” He elaborated on the broader implications, stating, “If you are a company producing in the U.S. who is now protected from foreign competition, you can raise your prices and benefit.”
The former president’s comments weren’t exactly enough to change Goldman’s mind. Mericle noted, “I do think most of the impact is still ahead of us. I’m not worried about it. I think, like the White House, like Fed officials, we would see this as a one-time price level effect.” This points to Goldman’s optimism that although the short-term effects of tariffs are painful, they should begin to even out.
Goldman’s analysis could not be timelier as inflation continues to be a major bugaboo for the consumer and policymakers alike. By the end of June, the core Personal Consumption Expenditures (PCE) inflation rate was up to 2.8%. This figure exceeds Goldman’s estimate and highlights the ongoing struggles with containing inflation. The Federal Reserve’s inflation target is 2%. This goal emphasizes the possible economic effects that might result from changes in prices due to the tariffs.
Employment trends have been on the mind of Goldman as well. This announcement follows July’s top nonfarm payrolls report disappointment, along with its dismal tariff report. The firm’s recent research reveals how these labor market dynamics play into larger economic factors such as inflation and consumer spending shifts.