Goldman Sachs: Tariffs in Canada and Mexico will raise U.S. inflation by 0.6%

On March 4th, Goldman Sachs economists predicted that Trump’s imposition of a 25% tariff on imported goods from Canada and Mexico, as well as a 10% tariff on Canadian energy, will cause the core consumer prices in the United States to rise by 0.6%. “We do not rule out the possibility of suspending the tariffs at the last minute,” they wrote in a report to clients on Monday night. “This time, an obvious strategy is to extend the deadline to April 2nd to align with other tariff announcements. If the tariffs take effect, we believe they are unlikely to become a permanent feature of U.S. trade policy, although how long they will last is uncertain.” In January, the U.S. core consumer price index, excluding food and energy, rose by 3.3% year-on-year, while the Fed’s preferred PCE index rose by 2.6% year-on-year.