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2w ago

Reciprocal Tariffs Take Effect as U.S. Consumers Brace for Steep Price Increases

Goldman Sachs projects that household cost absorption will climb to 67 percent by October, pushing core PCE inflation to 3.2 percent year-over-year

People shop at a grocery store in Brooklyn on May 13, 2025 in New York City.
US President Donald Trump said foreign nations would "eat" tariffs, but analysts suggest that has not been the case.
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Overview

  • President Trump’s blanket 10 percent baseline tariff and reinstated reciprocal duties took full effect August 7, and a 25 percent levy on Indian exports is set to begin in the coming weeks.
  • Households have borne just 22 percent of tariff costs so far but are projected to absorb 67 percent by October, according to Goldman Sachs.
  • Tariffs have already added about 0.20 percentage points to core PCE inflation and are forecast to push year-end core inflation to around 3.2 percent, well above the Federal Reserve’s 2 percent target.
  • U.S. businesses covered 64 percent of tariff expenses through midyear and foreign exporters absorbed 14 percent, but retailers such as Adidas and Walmart are planning price hikes ahead of the holiday season.
  • An Omnisend survey finds Americans are spending $12.2 billion more per month on imports and shifting toward domestically made goods as tariff costs rise.