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.
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personal finance
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August 11, 2025
10:15 AM
Fortune
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Economy·TariffsTrump said foreign countries would ‘eat’ tariffs—but U.S. consumers and es will actually pay 75% at bestBy Eleanor PringleBy Eleanor PringleReporterEleanor PringleReporterEleanor Pringle is an award-winning reporter at Fortune covering news, the economy, and personal finance
Eleanor previously worked as a correspondent and news editor in regional news in the U.K
She her journalism training with the Press Association after earning a degree from the University of East Anglia.SEE FULL BIO US President Donald Trump said foreign nations would "eat" tariffs, but analysts suggest that has not been the case.Yuri Gripas/Abaca/Bloomberg - Getty ImagesGoldman 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 ved optimistic at best, and misguided at worst
While tariffs have yet to significantly shift the dial on inflation—mpting individuals 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 ved 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 India, which is facing a rate of 25% that may double on August 27 as punishment for buying Russian oil. wise, 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 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.” One portion of the economy which intends to reduce its is U.S. es
The Conference Board released its U.S
CEO Confidence report for the third quarter last week, which revealed 64% are certain they’d be passing the price hike onto consumers, and a further 16% said they’re still considering
This is a higher rate than previously identified (ing the prediction of Goldman Sachs) as only in June the New York Fed reported a smaller 45% of services firms were intending to pass on the full extent of their tariff-related increases
Peng noted that her maths “implies that U.S. es have absorbed more than half of the tariff costs so far but that their would fall to less than 10%
This net impact on U.S. es ly masks that some companies have absorbed a larger of tariff costs, while some domestic ducers shielded from import competition have raised their own prices and benefited.” Inflation passthrough Of course, if consumers are paying higher prices for goods and services then the Federal Reserve’s job of keeping inflation to 2% will only get more difficult
Goldman Sachs believes this will be the case, writing: “Our analysis implies that tariff effects have boosted the core PCE price level by 0.20% so far. “We expect another 0.16% impact in July, ed by an additional 0.5% from August through December
This would leave core PCE inflation at 3.2% year-over-year in December, assuming that the underlying inflation trend net of tariff effects is 2.4%.” Reflecting on the June CPI report (the available at the time of writing), Macquarie’s North America economists David Doyle and Chinara Azizova ed that the data was already showing hints of passthrough inflation
They wrote last month: “Notable price pressures were apparent in household furnishings and supplies, apparel, and audio ducts, sporting goods, and toys
This list suggests impacts from tariffs on the data
One measure that reflects this is core goods ex used cars and trucks
This accelerated to +0.3% MoM, its strongest pace since Feb-23
It also shows an accelerating monthly trend.” Many economists are hoping Fed chairman Jerome Powell will see through this inflation and lower the base rate, in part to offset an alarming jobs report from the Bureau of Labor Statistics a matter of weeks ago
But analysts can’t hold their breath—after all, Powell made the point at his last press conference that by not raising rates (a move which truly would have upset ) he is already seeing through such pressures
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