Banking giant Goldman Sachs says consumers will bear the brunt of President Donald Trump’s new round of tariffs, as the market analytics firm S&P Global warns that risk aversion has returned for US investors.
In a new interview on CNBC, David Mericle, Goldman Sachs’ chief U.S. economist, says that consumers will soon bear two-thirds of the tariffs as it takes time for corporations to pass along price increases to customers.
“In principle, tariff costs can be borne by foreign exporters, by US businesses or by US consumers. Now, we’ve had tariffs in place on that very first round from China for about 5 or 6 months. So I think we have learned a little something.
Our conclusion is that US businesses have borne most of the tariff costs so far, because it takes time to negotiate lower import prices or to pass price increases along to consumers.
But if the most recent tariffs, like the April tariff, follow the same pattern that we’ve seen with those earliest February tariffs, then eventually by the fall, we estimate that consumers would bear about 2/3rds of the cost. Foreign exporters would bear about one quarter of the cost, and US businesses would absorb less than 10%.”
Meanwhile, S&P Global says its latest Investment Manager Index survey, which measures net risk appetite among surveyed investors, came in at a -20% reading
That’s the lowest level since April, signaling investor sentiment is weakening.
As stated by Jingyi Pan, economics associate director and S&P Global,
“Investor sentiment has visibly weakened at the start of August, digesting the slew of tariff developments since July, including the implementation of higher tariffs for major US trading partners and the announcement of new tariffs on [semiconductors] towards the tail-end of the survey period.”
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