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Trump said foreign countries would ‘eat’ tariffs—but U.S. consumers and businesses will actually pay 75% at best

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Goldman Sachs estimates U.S. consumers now shoulder two-thirds of President Trump’s new tariff costs, with more companies planning to pass them on in the future and foreign exporters refuse to “eat” the price hikes. The bank expects the measures to lift core PCE inflation to 3.2% by year-end, adding pressure to the Fed’s 2% target.

When President Trump announced his tariff agenda, he said it would be foreign companies and consumers that would “eat” the price hikes. That’s a take which may be proved optimistic at best, and misguided at worst.

While tariffs have yet to significantly shift the dial on inflation—prompting individuals like Treasury Secretary Scott Bessent to label them the “dog that didn’t bark”—analysts are widely expecting the hikes to ultimately be paid for by the U.S.

So far the sharpest end of the tariff regime has yet to be felt. President Trump delayed his ‘Liberation Day’ tariffs by three months in order to agree deals with trading partners.

Some negotiations have proved successful, with framework deals done with the U.K., the E.U. and Japan to name a few, drastically lowering tariff rates from Trump’s initial threats back in April. Yet countries which haven’t yet agreed to a deal (who received letters informing them of their new tariff rate) saw their effective export rate rise on the deadline of August 7.

That includes nations like India, which is facing a rate of 25% that may double on August 27 as punishment for buying Russian oil. Likewise, while the Trump administration has touted a deal near-done with China on many occasions, nothing beyond an agreement to delay tit-for-tat price increases until this week has been confirmed.

With a slew of tariffs now effectively in place, Goldman Sachs believes that the cost absorbed by foreign exporters will grow over time, but will remain low.

Economist Elsie Peng wrote in a note yesterday seen by Fortune that Goldman believes exporters absorbed 14% of the costs of all tariffs in June, which will rise to 25% by October if the sanctions follow a similar trajectory to the price hikes administered by the Trump administration in his first term.

But the portion consumers can expect to pay is also on the rise. Peng noted that around 36% of the 2025 tariff costs were passed onto consumer prices after three months of implementation and around 67% were passed on after four months.

The economist added that “although the passthrough rate appears to be increasing rapidly over time, it still remains somewhat below the passthrough rate that we estimate at the same point in time during the 2018-2019 trade war.”

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