Goldman Says Tariffs Will Raise Price, But Slow Growth Will Prevent Inflation Surge

Goldman Sachs economists expect Trump’s tariff policy to drive prices higher but say it won’t trigger a new inflation surge due to a projected economic slowdown, according to MarketWatch. Economist David Mericle forecasts the core PCE inflation rate will rise from 2.6% in March to 3.6% by year-end, driven by pricier imports, costlier domestic production, and opportunistic pricing. Mericle expects the U.S. economy to grow 1% later this year and doubts high inflation will persist with weak growth. He says the inflation rebound will be milder than in 2021–2022, reducing the risk of it becoming entrenched in pricing and wage-setting behavior. Mericle warns the inflation rebound could worsen if tariff rates become prohibitive or escalate next year.