Trump's Tariff Storm Could Soon Hit American Consumers: Here's Why

So far, President Donald Trump's trade tariffs have barely touched consumer prices, giving the White House a reason to claim victory over early fears of an inflation spike.

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However, some economists argue that the real impact will only be a few months away, and this is going to have a highly impactful effect.

In a note shared Monday, Goldman Sachs economist Elsie Peng indicated that through June, U.S. consumers had shouldered just 22% of the tariff costs, with U.S. businesses absorbing 64% and foreign exporters covering 14%.

That balance, however, is likely to shift sharply.

By October, she expects that split to look very different: consumers picking up 67% of the tab, exporters 25%, and U.S. businesses just 8%.

Brace For Tariffs Impact: Consumers Will Pay More

So far, the 9 percentage point increase in the effective tariff rate this year has lowered import prices by about 1.3%. By the time the expected 14-point increase for 2025 is in place, import prices could be down 3.7%.

But cheaper import prices don't necessarily mean more affordable goods for consumers. In fact, products that rely heavily on imports — like household appliances and information-processing equipment — are already up 7.5% more than their usual price trend this year.

Goldman estimates that after four months of new tariffs, about two-thirds of the extra costs end up in consumer prices, not far from the pace during the last trade war in 2018–2019.

That means businesses, which so far have shouldered most of the pain, are about to see their share shrink to single digits, even as some domestic producers use the protection from tariffs to raise their own prices.

Goldman calculates that tariffs have already added 0.20 percentage points to core inflation, with another 0.16 points expected in July and a further 0.5 points between August and December.

That would push core inflation to around 3.2% by the end of the year, assuming the underlying trend without tariffs is 2.4%.

"We continue to expect 70% of the direct costs of tariffs would fall on consumers and the total would rise to about 100% when combined with other spillover effects," Peng said.

How Will Trump’s Tariffs Reshape Your Shopping Bill?

Oxford Economics sees similar risks. Economist Adam Slater sees the average U.S. tariff rate rising above 18% — the highest since the 1930s.

Thus far, importers have paid less in customs duties than the rates would suggest, meaning the full impact on prices and growth hasn't been felt yet.

Prices for goods like furniture, toys and appliances are already climbing several percent a year.

Some products, such as cars and clothing, have been spared for now thanks to leftover inventory and weak demand, which is forcing manufacturers to absorb some costs.

Still, inflation pressures are building. A key gauge of core inflation — the Personal Consumption Expenditure (PCE) price index excluding food and energy — was rising at a 3% annualized pace in June, up from 2.4% in January.

"We still expect U.S. headline inflation to rise to around 3.5% by year-end," Slated stated.

How much of the tariff burden is passed on to store prices will depend on several factors: whether retailers can find cheaper suppliers, how aggressively U.S. firms raise prices under tariff protection, and how much wholesalers and distributors can absorb.

History offers a warning — a Fed study found that during the 2018–2019 tariff wave, most of the costs were quickly passed on to consumers.

This time, the hit has been delayed, but the experts’ message is clear: the relief won't last much longer.

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