Goldman Sachs suggests that the latest tariff proposal by Donald Trump, who won the United States presidential election in November, will become a factor of upward pressure on inflation in the US.
It’s worth mentioning that on Monday, November 25, Mr. Trump posted a publication on the social media platform Truth Social, which contained information about his intention to impose an additional 10% tariff on goods imported from China and a 25% duty on products shipped from Mexico and Canada. Goldman Sachs’ chief economist Jan Hatzius stated that the implementation of the relevant intention will cause an increase in consumer prices in the United States. In this context, the expert mentioned the rule of thumb that every 1 percentage point increase in the effective tariff rate would raise core PCE prices by 0.1%. Jan Hatzius stated that the materialization of Donald Trump’s intentions would boost core PCE prices by 0.9%
PCE refers to the personal consumption expenditures price index. It is worth noting that this indicator is the preferred inflation reading for the Federal Reserve System.
Nowadays, inflation in the United States is still above the target of the central bank of this country of 2%. Currently, the mentioned figure is 2.6%.
Traders are currently scaling back their expectations for the Fed’s monetary easing next year. At the same time, it is not yet known to what extent the corresponding tendency correlates with the results of the presidential election and the economic situation in the United States.
