Goldman Sachs predicts higher inflation and slower US growth due to new tariffs

Goldman Sachs Group Inc. economists anticipate an increase in baseline US tariff rate from 10% to 15%, including a special 50% duty on copper and critical minerals. They estimate these measures will raise inflation while slowing American economic growth.

Chief US economist at Goldman David Mericle notes the new tariff assumptions and their initial observed impacts have led the bank to adjust its forecasts. While tariffs will inevitably push consumer prices higher, current data, including business surveys, suggests slightly less effect on final prices than seen during the 2019 tariff period.

As a result, Goldman Sachs now projects core inflation will reach 3.3% in 2025 (versus its previous 3.4% forecast), then decline to 2.7% in 2026 and 2.4% in 2027. These levels remain above prior projections, with tariffs expected to cause cumulative price increases of 1.7% over two to three years.

The tariffs will also weigh on GDP growth, with estimates showing a 1 percentage point reduction of economic growth in 2025, followed by 0.4 and 0.3 point decreases in 2026 and 2027 respectively. Consequently, Goldman Sachs has lowered its 2025 US GDP growth forecast to 1%.