Undeterred by Trump's criticism, Goldman Sachs responds: Tariffs will begin to impact consumers' wallets

In the face of fierce criticism from U.S. President Donald Trump, Goldman Sachs economist David Mericle insisted on Wednesday that the bank's controversial prediction is correct, namely that tariffs will begin to impact consumers' wallets.

In an interview on CNBC, Mericle stated that despite the president's opposition, Goldman Sachs remains confident in its research. He said, "We stand by the conclusions of this research. If the recent tariffs, such as those imposed in April, follow the same pattern we saw with the tariffs from early February, then by the fall, we expect consumers to bear about two-thirds of the costs."

Mericle added, "If you are a company producing in the U.S. and currently protected from foreign competition, you can raise prices and profit from it. So these are our estimates, and I think they are actually very consistent with the findings of many other economists."

Mericle expects that Trump is likely to still get some of the rate cuts he has been demanding from the Federal Reserve. He said:

"I do believe that most of the impact is still ahead. I'm not worried. I think, like White House and Federal Reserve officials, we will view this as a one-time price level shock. I don't think this will have a significant impact on the Federal Reserve because right now they are more concerned about the labor market, and I think that will be the dominant factor."

The Reason Behind Trump's Attack on Goldman Sachs

On Tuesday, Trump posted on social media platform Truth Social, accusing Goldman Sachs of making "incorrect predictions" about the market impact of tariff policies and consumer costs, specifically calling out CEO David Solomon, urging him to "find a new economist" or consider resigning, suggesting he might as well change careers and focus on his hobbies, like being a DJ.

Trump's post came two days after a research report released by Goldman Sachs economist team, including Elsie Peng, on August 10, which pointed out that although so far, most of the costs of Trump's tariffs have been borne by exporters and businesses, in the coming months, this burden will shift to consumers, with American consumers expected to bear most of the tariff costs.

The report estimated that as of June, American consumers bore 22% of the tariff costs, but if the latest tariffs follow the patterns of previous years, it is expected that by October, the proportion borne by consumers will rise to 67%. If this is the case, an important inflation forecast indicator that the Federal Reserve is concerned about—the Personal Consumption Expenditures (PCE) price index excluding food and energy—will rise to 3.2% by the end of the year. The core PCE inflation rate in June was 2.8%, while the Federal Reserve's target is 2%.

Following a slight increase in the consumer price index released this week, along with a weak July non-farm payroll report and significant downward revisions to the data from the previous two months, the market currently expects the Federal Reserve to cut rates at each of its remaining three meetings this year