Jardine Matheson added to APAC Conviction List at Goldman Sachs
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Business Insider
7 minutes ago
- Business Insider
Bad news for US shoppers: The cost of everything from laptops to cars is likely to keep rising
American consumers are beginning to feel the pinch from the US's latest wave of import tariffs, and the pain is expected to get worse. Since returning to office, President Donald Trump has imposed a blanket 10% baseline tariff on all foreign imports, additional varying rates on specific countries, and a series of product-specific duties, including on automobiles. So far, consumers have absorbed just 22% of the tariff costs associated with this year's increases, according to a new Goldman Sachs report published Sunday. But by October, that share could rise to 67%, if pricing patterns continue to follow those observed earlier in the year. Goldman reached that conclusion by analyzing import and consumer price data through June. "Descriptive evidence shows that goods categories heavily exposed to imports have indeed experienced sizable price increases since the beginning of this year, relative to their prior trends," they wrote. Specifically, prices of household appliances and information processing equipment — such as computers and electronics — have increased by 7.5 percentage points more than what they would've cost without the tariffs, they wrote. What's especially striking is who's been absorbing tariff costs so far. US businesses have born the brunt, covering about 64% of costs through midyear, Goldman found. Meanwhile, foreign exporters have cut prices to stay competitive, absorbing around 14%. But that's expected to change. According to Goldman, tariffs have already contributed about 0.20 percentage points to core Personal Consumption Expenditures inflation — the Federal Reserve's preferred inflation measure. They expect an additional 0.16% increase in July, and another 0.5% from August through December. Some major companies, including Adidas and Walmart, have said that they will be hiking prices in the US. That means consumers may face higher prices on everything from electronics to cars heading into the holiday shopping season. Goldman expects core PCE inflation at 3.2% year over year by December — well above the Fed's 2% target. Without tariffs, Goldman says, the underlying inflation trend would be closer to 2.4%. Treasury data shows that the federal government has collected over $100 billion from customs duties so far this year — a sign that "someone is paying" for the tariffs, wrote Deutsche Bank last month.
Yahoo
20 minutes ago
- Yahoo
US Consumers to Bear Brunt of Tariff Hit, Goldman Economists Say
(Bloomberg) -- The impact of President Donald Trump's tariffs on consumer prices is just getting started, according to research by Goldman Sachs Group Inc., adding more uncertainty to a Treasury market that has been gripped by shifting bets on the pace of interest rate cuts. Sunseeking Germans Face Swiss Backlash Over Alpine Holiday Congestion New York Warns of $34 Billion Budget Hole, Biggest Since 2009 Crisis Three Deaths Reported as NYC Legionnaires' Outbreak Spreads A New Stage for the Theater That Gave America Shakespeare in the Park Chicago Schools' Bond Penalty Widens as $734 Million Gap Looms US companies have so far taken the bulk of the hit from Trump's tariffs but the burden will increasingly be passed on to consumers as companies hike prices, economists including Jan Hatzius wrote in a note. Consumers in the US have absorbed an estimated 22% of tariff costs through June, but their share will rise to 67% if the latest tariffs follow the pattern of levies in previous years, they wrote. The net result: faster inflation. The core personal consumer expenditure index, one of the Federal Reserve's favorite measures of inflation, will hit 3.2% year-on-year in December, according to the Goldman analysts. They said underlying inflation net of tariffs would be 2.4%. The rate was 2.8% in June. The report adds weight to a widespread view among economists that Trump's sweeping tariffs will fuel inflation at a time when Fed policy has become a hot topic not just for bond traders but even for the president himself. Trump has broken convention by publicly calling for the Federal Reserve to cut rates, suggesting Fed Chair Jerome Powell should resign and adding an ally — at least temporarily — to the monetary policy committee. Bond traders are now looking ahead to Tuesday's inflation data for clues on how fast the Fed can cut. Treasury 10-year yields rose around seven basis points last week, but fell during European trading hours Monday. Traders are pricing in a more than 80% chance of a rate cut at the Fed's next meeting in September, but the prospect of more easing in the months to come is clouded by the uncertain impact of tariffs on inflation. Staggered Impact Most economists consider tariffs to be inflationary, since logic suggests companies will pass the additional costs onto their customers. But the view isn't unanimous — and the debate partly comes down to definitions. 'Inflation, certainly as it's relevant to a central bank setting monetary policy, concerns an ongoing increase in the overall price level,' said Oren Cass, founder and chief economist at American Compass, in a recent episode of Bloomberg's Trumponomics podcast. 'If you choose a specific policy that by design makes a one-time change in the price of certain things, that is not inflation in a sense that you would want a central bank to worry about.' Read: JPMorgan Says Treasury Curve Can Steepen on Miran Fed Pick Goldman's analysis, which suggests businesses have held back from an all-at-once increase in prices, supports the argument that tariffs will ultimately be inflationary. The bank said tariff effects have boosted core PCE by 0.2% so far, with another 0.16% expected in July and an additional 0.5% over the rest of the year. While American businesses have taken around 64% of the hit from tariffs so far, their share will fall to less than 10% as they pass on more of the costs onto consumers, according to the report. The analysts added that the impact on US businesses has been mixed — while some have taken a larger share of the tariff hit, domestic producers shielded from competition have raised prices and benefited. Those opportunistic price rises also push up inflation. Foreign exporters have absorbed an estimated 14% of the cost of tariffs through June, but their share may rise to 25%, Goldman said. The impact on foreign exporters can be gauged from a slight decline in import prices on tariffed goods, they said. The Game Starts at 8. The Robbery Starts at 8:01 The Pizza Oven Startup With a Plan to Own Every Piece of the Pie Digital Nomads Are Transforming Medellín's Housing It's Only a Matter of Time Until Americans Pay for Trump's Tariffs Russia's Secret War and the Plot to Kill a German CEO ©2025 Bloomberg L.P.
Bloomberg
37 minutes ago
- Bloomberg
Billionaire Family's Ex-Goldman Banker Adds to UK Wealth Exits
A former Goldman Sachs Group Inc. banker behind one of London's most prominent investment firms for wealthy families exited the UK, the latest in a line of departures amid tax hikes on well-heeled residents. Nasir Alsharif, the top executive at Sackville Capital and a founding member of the US bank's Dubai team, is now typically resident in his home nation of Saudi Arabia, according to registry filings. The 45-year-old previously lived in the UK for at least three years as he helped build up the firm, which oversees assets for a billionaire Saudi family and is focused on private market investments.
