Goldman Sachs Warns Of Tariff Impact As US Signs Trade Deals

Goldman Sachs economists have revised their forecasts and now expect the U.S. government to increase trade tariffs. They believe the average tariff rate on imported goods (called the “reciprocal” tariff) will rise from 10% to 15%.

In addition, the U.S. may impose a heavy 50% tariff on imports of copper and other critical minerals. Sector-specific tariffs are also expected in 2026, including those on heavy trucks and aircraft. Tariffs on pharmaceuticals are likely to be delayed until after the 2026 midterm elections.

Impact on Inflation and Economy

Goldman Sachs now expects U.S. core inflation (which excludes food and energy) to reach 3.3% in 2025, slightly lower than their earlier estimate of 3.4%. However, inflation is expected to stay higher for longer than previously predicted—at 2.7% in 2026 and 2.4% in 2027. These rates are above the Federal Reserve’s 2% target.

The economists say that these new tariffs could raise consumer prices by a total of 1.7% over the next 2–3 years. They also warn that the U.S. economy will slow down. Goldman Sachs forecasts GDP growth of only 1% in 2025. Tariffs are expected to reduce growth by:

1 percentage point in 2025,

0.4 percentage points in 2026, and

0.3 percentage points in 2027.

However, Goldman Sachs Chief Economist David Mericle said that the early data shows tariffs may not raise consumer prices as much as they did during the 2019 trade war.

Two Big Trade Deals Finalized

Despite rising tariffs, the U.S. has signed two major trade deals—one with Japan and another with Indonesia.

U.S.–Japan Deal

President Donald Trump announced a new trade agreement with Japan. Under this deal:

Japan will invest $550 billion in the U.S. economy.

The U.S. will apply a 15% tariff on many Japanese goods.

The deal opens up Japan’s market for U.S. exports such as cars, trucks, rice, and other farm products.

Trump called it “the largest deal ever made” and said 90% of the profits from the Japanese investment would benefit the United States.

This deal is expected to create thousands of jobs and strengthen the U.S.–Japan trade relationship.

U.S.–Indonesia Deal

The U.S. also signed a trade agreement with Indonesia, led by President Prabowo Subianto. Under this agreement:

Indonesia will remove 99% of its tariffs on U.S. goods.

The U.S. will apply a 19% tariff on Indonesian products.

This arrangement is designed to make it easier for American companies to sell technology, industrial goods, and farm products in Indonesia. At the same time, the U.S. will protect its own industries by placing tariffs on cheaper Indonesian imports.

Conclusion

The U.S. is moving toward a tougher trade policy with higher tariffs and stronger trade deals. While the new tariffs may slow down the economy and push prices higher, the deals with Japan and Indonesia could help American exporters and create new jobs. Policymakers will need to carefully balance both sides to ensure long-term economic growth.