The latest tariff proposal from President-elect Donald Trump would likely put upward pressure on inflation in the United States, according to Goldman Sachs.
On Monday, Trump said on social media site Truth Social that he would impose an additional 10% tariff on goods from China and a 25% duty for Canada and Mexico. Goldman’s chief economist, Jan Hatzius, said in a note that the proposed levies would result in a notable increase for consumer prices in the U.S..
“Using our rule of thumb that every 1 [percentage point] increase in the effective tariff rate would raise core PCE prices by 0.1%, we estimate that the proposed tariff increases would boost core PCE prices by 0.9% if implemented,” Hatzius said.
“PCE” refers to the personal consumption expenditures price index, which is the preferred inflation reading of the Federal Reserve.
A tariff-linked increase in core PCE could scramble the calculations around Fed rate cuts. The October PCE reading is due out Wednesday, and …