Goldman’s forecast and inflation impact
The bank’s latest analysis, led by economist Elsie Peng, estimates that consumers paid 22% of tariff costs through June, a Fortune report noted. By year-end, that figure could climb to 67% as businesses pass more expenses to shoppers and supply chains adjust.
Peng’s note projects the personal consumption expenditures (PCE) price index—excluding food and energy—will rise to 3.2% in December. The Federal Reserve’s target for inflation is 2%. Core PCE inflation stood at 2.8% in June.
“If you are a company producing in the US who is now protected from foreign competition, you can raise your prices and benefit,” Mericle said.
Businesses prepare to pass on costs
While exporters have so far absorbed a small share of the tariffs—around 14% in June—Goldman predicts that share will increase to only 25% by October. US businesses, which have absorbed more than half of tariff costs to date, are expected to reduce their share to less than 10% as they raise prices.
A Conference Board survey last week showed 64% of US CEOs plan to pass the tariff costs to consumers, with another 16% still deciding. This is higher than the 45% reported by the New York Fed in June.