The cost of Trump’s tariffs has fallen ‘entirely’ on US businesses and households: Goldman

Goldman Sachs said the cost of tariffs imposed by President Donald Trump last year against Chinese goods has fallen “entirely” on American businesses and households, with a greater impact on consumer prices than previously expected.

The bank said in a note that consumer prices are higher partly because Chinese exporters have not lowered their prices to better compete in the US market.

Trump has repeatedly — and inaccurately — claimed that China will pay for tariffs imposed by the U.S.

“One might have expected that Chinese exporters of tariff-affected goods would have to lower their prices somewhat to compete in the US market, sharing in the cost of the tariffs,” Goldman said.

“However, analysis at the extremely detailed item level in the two new studies shows no decline in the prices (exclusive of tariffs) of imported goods from China that faced tariffs.”

Goldman also said the risk of a final round of tariffs on the roughly $300 billion of remaining imports from China has now risen to 30%.

Further escalation of the trade war could also result in a 0.4% hit to GDP, and if trade tensions instigated a sell-off in the equity market, the growth impact could worsen, Goldman said.

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