President Trump’s tariff policy was billed as a path to greater American prosperity, but so far, it’s mostly raised costs across the board, with Americans bearing the brunt.
Goldman Sachs’ early analysis of the tariffs’ impact through June — roughly three months into the policy — found that U.S. companies have absorbed 64% of the total costs, U.S. consumers 22%, and foreign exporters just 14%.
Goldman's latest (still very early) analysis of tariff effects thru June 2025:
undefined Scott Lincicome (@scottlincicome) August 10, 2025
-Foreign exporters absorbed 14% of US tariffs
-US companies ate 64%
-US consumers ate 22%
-Protected US companies also raised prices
-Consumers will see bigger price increases (70%) thru the Fall pic.twitter.com/0S0fVnEvQp
Some of the hardest-hit sectors include household appliances, information processing equipment, and furniture, Goldman noted.
And the squeeze may not be over. Consumers are likely to see steeper price increases in the fall, Cato Institute president Scott Lincicome wrote, citing his review of the Goldman report.
The data reinforces a warning the Cato Institute has sounded since the Trump administration reignited its trade war earlier this year.
Cato adjunct scholar Kyle Handley pushed back on claims that tariffs are comparable to value-added taxes (VAT) used in other countries.“The VAT line gives cover to protectionism under the guise of ‘fairness,’” Handley wrote.
“The economics are clear: VAT is not a tariff, and tariffs are not a consumption tax. If you’re designing trade policy based on a false analogy, don’t be surprised when the results are exactly what economists predicted: higher costs, less trade, and a reduction in global competitiveness,” he added.
Tariff-induced inflation ties the Fed’s hands
The timing couldn’t be worse. Higher prices are hitting Americans as more households struggle with affordability and they’re also making it harder for the Federal Reserve to act.
Goldman’s analysis suggests the latest tariff hikes will push the core Personal Consumption Expenditures (PCE) index — the Fed’s preferred inflation gauge — up by 0.66% by year’s end.
That would lift the annual core PCE rate to around 3.2%, well above the Fed’s 2% target.The index is already warming up. In June, it rose 0.3% from the prior month and 2.8% from a year earlier, up from 2.7% in May.
As expected, the Fed cited these inflation pressures as one reason for leaving interest rates unchanged at its July policy meeting.
The central bank’s next policy meeting is set for Sept. 16–17, carrying extra weight as policymakers will deliver a rate decision alongside fresh inflation, GDP, and interest rate forecasts.
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