Who really pays when Trump imposes tariffs? It’s not other countries, economists say

Americans are set to pay more than half of President Donald Trump’s tariff costs as companies raise prices, according to economists of Goldman Sachs Group Inc.

U.S. consumers will likely shoulder 55% of tariff costs by the end of the year, with American companies taking on 22%, the Goldman analysts wrote in an Oct. 12 research note to clients. Foreign exporters would absorb 18% of tariff costs by cutting prices for goods, while 5% would be evaded, they wrote.

For now “US businesses are likely bearing a larger share of the costs” as it takes time to raise prices, economists Elsie Peng and David Mericle wrote in the note. “If recently implemented and future tariffs have the same eventual impact on prices as the tariffs implemented earlier this year, then US consumers would eventually absorb 55% of tariff costs.”

U.S. levies have raised core personal consumption expenditure prices by 0.44% so far this year, and will push up the closely watched inflation reading to 3% by December, they wrote.

Trump has upended global commerce with a slew of tariffs and trade restrictions in a mission to close trade gaps with other countries and encourage manufacturing in the U.S.

While Trump and his officials have maintained that trading partners bear the cost of tariffs, American importers pay the levies enforced by Customs and Border Protection and consumers face higher prices when companies pass on costs. Foreign firms absorb tariffs when cutting prices to maintain market share.

Trump had previously assailed Goldman and its CEO David Solomon for similar commentary that American consumers have borne an estimated 22% of tariff costs through June.

“They made a bad prediction a long time ago on both the Market repercussion and the Tariffs themselves, and they were wrong, just like they are wrong about so much else,” the president said on his social-media platform in August.

Goldman’s latest report doesn’t include Trump’s most recent threat to increase levies on China to 100% and add restrictions on “critical” US software exports. “We are not assuming any changes to tariff rates on imports from China, but events in recent days suggest large risks,” the analysts wrote.

Dmitrieva writes for Bloomberg.