Goldman Sachs: U.S. Consumers Bear 55% of Tariff Costs
American households are shouldering 55% of the costs from President Trump’s sweeping tariff policies, according to a comprehensive analysis from Goldman Sachs released on October 12, contradicting the administration’s repeated claims that foreign governments would bear the financial burden.
The report, led by Goldman Sachs economists Elsie Peng and David Mericle, found that U.S. businesses absorb 22% of tariff costs while foreign exporters take on just 18% by cutting prices to remain competitive. The findings come six months after Trump’s April tariff implementation and as the president threatened to impose an additional 100% tariff on Chinese imports starting November 1.
Inflation Pressures Mount
The tariffs have contributed to a 0.44% increase in core personal consumption expenditure prices, a key Federal Reserve inflation measure. Goldman economists project this could push inflation to 3% by December, well above the Fed’s 2% target. The Consumer Price Index reached 2.93% in August, reflecting consecutive monthly increases since Trump’s April tariff announcement.
“At the moment, U.S. businesses are likely bearing a larger share of the costs because some tariffs have just gone into effect and it takes time to raise prices on consumers.”
The Goldman Sachs note explained that companies are expected to offload more costs onto consumers in the coming months. A Conference Board survey revealed 64% of CEOs are certain they will pass tariff-related price increases to consumers, with another 16% considering it. This represents a significant increase from June, when only 45% of services firms intended to pass on the full extent of tariff-related costs.
Business Response and Market Volatility
Financial markets plunged Friday after Trump’s threat of 100% tariffs on China, though the president attempted to calm tensions Sunday by posting on social media that China’s President Xi “just had a bad moment” and “doesn’t want Depression for his country”. The tariff threat followed China’s announcement of strict export controls on rare earth minerals.
The market drop wiped out $2 trillion from U.S. stock values in a single trading session, marking one of the most severe reactions to the escalating trade tensions.
Supreme Court Challenge Looms
The Supreme Court is scheduled to hear arguments on November 5 challenging Trump’s tariff authority under the International Emergency Economic Powers Act. Lower courts have ruled Trump exceeded his power by imposing tariffs of “unlimited duration on imports of nearly all goods from nearly every country”.
A federal appeals court struck down many of the tariffs late last month after determining they were an overreach of executive power, though the court allowed them to remain in place temporarily to give the administration time to appeal. The Supreme Court agreed to an unusually expedited schedule, with the government filing its opening brief just 10 days after the court announced it had granted review.
“If we don’t have [the tariffs], we’re not going to have a country. We’re going to be in very, very serious financial trouble.”
Trump defended the tariffs in early September, though few economists outside the administration share this assessment.
Tariff Implementation and Revenue
Since April, Trump has implemented tariffs ranging from 28% on China to 16% on other countries, covering goods including copper, steel, aluminum, and automobiles. Tariff revenues totaled over $31 billion in September alone, more than four times the amount collected in the same period a year ago. For fiscal year 2025, tariff revenues reached a record $195 billion.
Trump has proposed using these revenues for economic relief, including household rebates and farmer subsidies.
Administration Response
White House Spokesman Kush Desai responded to the Goldman Sachs analysis by reiterating the administration’s position: “While Americans may face a transition period from tariffs upending a broken status quo that has put America Last, the cost of tariffs will ultimately be borne by foreign exporters”. The statement added that companies are already shifting and diversifying their supply chains in response to tariffs, including by onshoring production to the United States.
Treasury Secretary Scott Bessent refuted the notion that tariffs function as a tax on American consumers during a recent NBC News interview.
The Supreme Court’s November 5 hearing will determine whether the White House can unilaterally impose tariffs on a significant share of foreign goods, representing a critical test of presidential power and the linchpin of Trump’s economic agenda.
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