Trump criticizes Goldman Sachs CEO for tariff forecasts, suggesting he should focus on his career as a disc jockey instead.
In a stark warning for the struggling US economy, a leading economist has issued a recession warning. The distribution of tariff costs under President Trump's tariff policies primarily falls on American consumers and businesses, rather than foreign countries.
According to a report by Goldman Sachs economists, led by Jan Hatzius, American consumers bear a regressive tax burden due to tariffs. In the short run, the poorest households pay more than three times the share of income compared to the wealthiest households. For 2025, average annual costs to households range from about $1,300 for the lowest income decile to $4,900-$5,000 for the top decile, with a median cost around $2,200 per household.
Businesses, especially those involved in imports and complex supply chains, face uncertainty and increased costs from tariffs. Companies anticipate disruptions and may need to adjust transfer pricing and contracts to mitigate tariff impacts. Retaliatory tariffs by foreign countries further exacerbate costs for exporters and producers relying on international markets.
U.S. businesses have absorbed 64% of the tariff costs to date, but their share is expected to decline to 8% over time, with American consumers expected to shoulder a larger portion of the costs. The Goldman Sachs report estimated that the core personal consumption expenditures (PCE) index has risen by 0.2% due to tariffs and is expected to rise by another 0.16% in July.
From August to December, the core PCE inflation is expected to rise a further 0.5%, leaving core PCE inflation at 3.2% year-over-year in December. Without the impact of tariffs, core PCE inflation would be 2.4% in December, according to the Goldman Sachs analysis.
President Donald Trump has claimed that "Trillions of Dollars" are being taken in on Tariffs and that they have not caused inflation or other problems for America. However, the Goldman Sachs report contradicts this claim, showing that American consumers and businesses are paying the bulk of the cost of Trump's tariffs.
In response to the report, President Trump criticized Goldman Sachs CEO David Solomon, who performs as a DJ under the stage name "DJ D-Sol." Trump suggested that Solomon should focus on being a DJ instead of running a major financial institution. Goldman Sachs declined to comment on Trump's post.
The Fed's longer-run inflation target is 2%, and inflation persisting at those levels through the end of the year could dampen the outlook for multiple interest rate cuts this year. The economic incidence of tariffs reflects the nature of tariffs as taxes on imports paid by domestic buyers and the embedded complexity of international trade relations under Trump’s tariff regime.
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