According to Goldman Sachs, and baseline tariffs are expected to be higher than originally estimated. Hard to see how this is good for the economy, and it doesn't square with his statement that Chyna would pay the tariffs.

Trump is pounding on Powell to lower interest rates while doing things that will push them up due to tariff-induced inflation and growing the national debt with his BBB spending. These things don't reconcile.

Quote:

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"We assume that about 65% of the increase in import costs as a result of the tariffs will ultimately be passed through to U.S. consumers," said the Goldman Sachs note from a team led by chief economist Jan Hatzius.

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Quote:

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President Donald Trump said on Wednesday that 'reciprocal' tariffs could range from 15% to 50% as the U.S. continues negotiating with trading partners ahead of an Aug. 1 tariff deadline. The 15% tariff baseline exceeds the 10% minimum tariff imposed on most countries. Economists said the result would be a higher effective tariff rate for U.S. consumers that could eventually push prices higher.

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Quote:

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"The 2025 tariffs disproportionately affect clothing and textiles, with consumers facing 40% higher shoe prices and 36% higher apparel prices in the short run," the Yale Budget Lab report showed.

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https://finance.yahoo.com/news/baseline-tariffs-could-higher-expected-213340034.html

I'm surprised that they don't pass through much more of the tarriffs.

MemphisAg1 said:

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According to Goldman Sachs, and baseline tariffs are expected to be higher than originally estimated. Hard to see how this is good for the economy, and it doesn't square with his statement that Chyna would pay the tariffs.

Trump is pounding on Powell to lower interest rates while doing things that will push them up due to tariff-induced inflation and growing the national debt with his BBB spending. These things don't reconcile.

Quote:

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"We assume that about 65% of the increase in import costs as a result of the tariffs will ultimately be passed through to U.S. consumers," said the Goldman Sachs note from a team led by chief economist Jan Hatzius.

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Quote:

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President Donald Trump said on Wednesday that 'reciprocal' tariffs could range from 15% to 50% as the U.S. continues negotiating with trading partners ahead of an Aug. 1 tariff deadline. The 15% tariff baseline exceeds the 10% minimum tariff imposed on most countries. Economists said the result would be a higher effective tariff rate for U.S. consumers that could eventually push prices higher.

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https://finance.yahoo.com/news/baseline-tariffs-could-higher-expected-213340034.html

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Goldman Sachs reports CNN is not fake news.

It's a new consumption tax. We are 2 Trillion in the hole and BBB cut income taxes so we need more revenue. I prefer consumption taxes over income taxes and we will likely need more of both in the near future since neither party can cut spending.

The taxpayers save $300B in interest payments for every 1% reduction in interest rates. So the push for the new tax and lower rates is aimed at reducing the insane deficit.

Now we just need Congress to do their part and cut spending.

Why wouldn't they? Why not 100%? We will absorb it all, one way or another.

DCAggie13y said:

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It's a new consumption tax. We are 2 Trillion in the hole and BBB cut income taxes so we need more revenue. I prefer consumption taxes over income taxes and we will likely need more of both in the near future since neither party can cut spending.

The taxpayers save $300B in interest payments for every 1% reduction in interest rates. So the push for the new tax and lower rates is aimed at reducing the insane deficit.

Now we just need Congress to do their part and cut spending.

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Other than tax on tips and a few other gimmicks, they didn't cut taxes much. They just extended current rates.

Trump and Congress had their chance to cut spending with BBB, gave it the middle finger instead, and will add $3T or more to the debt above the current run rate.

This new "consumption tax" -- if that's what we're calling it -- will just reduce consumption. When you tax something, you get less of it.

It's not in the Fed's mandate to minimize interest on the debt. They are charged with price stability (low inflation and full employment. It's the job of Congress and the president to minimize interest on the debt by keeping spending and taxes in balance, which they refuse to do.

We might look back five years from now and say this was pure genius on Trump's part and the majority of critical thinkers got it wrong. Maybe, but I wouldn't bet on it. He said Chyna would pay the tariffs and he's been proven wrong, so I don't put a lot of stock into his other statements on this topic.

Why believe this source? Everyone has been wrong on the tariffs and the overall economy since Trump took office. I doubt this is true as well.

Not sure anyone can tell what tariffs are going to do. WSJ just had an article over weekend that tariffs have not had the negative impact everyone thought and most people have downgraded their negative assumptions about tariffs.

I will also say to take what Goldman says with some level of skepticism. These are the same folks who said inflation....after printing trillions of dollars...was the most surprising outcome from COVID spending. Still one of the most unbelievable things I've read. I would expect that take from one of our local leftists, but not one of the most premier financial firms on the planet. Surely a function of having Democrats employed there.

It's like Russia. Some of y'all take the tariff bait every single time.

Consumers will change their buying patterns.

e=mc2 said:

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Why believe this source? Everyone has been wrong on the tariffs and the overall economy since Trump took office. I doubt this is true as well.

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What tarriffs? These big ones were supposed to hit July 9, then got delayed to Aug 1...maybe they get delayed or negotiated down next week.

50% for Brazil, 35% for Canada and the EU, 30% for Mexico, and 25% for Japan and South Korea.

FobTies said:

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e=mc2 said:

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Why believe this source? Everyone has been wrong on the tariffs and the overall economy since Trump took office. I doubt this is true as well.

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What tarriffs? These big ones were supposed to hit July 9, then got delayed to Aug 1...maybe they get delayed or negotiated down next week.

50% for Brazil, 35% for Canada and the EU, 30% for Mexico, and 25% for Japan and South Korea.

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But he's right. Without knowing Trump's strategy, you can't predict the outcome. And he isn't going to tell you his strategy. Might as well stop whining about it.

Goldman Sachs doesn't understand that the countries being tariffed pay the tariff.

Bunch of dummies.

I voted for Trump 3 times, but tariffs are a tax on the America people. However taxes aren't inflationary so I doubt tariffs will be either after the initial hit. Frankly I completely understand we need a thriving steel industry, we need to make our own ships, aircraft, weapons, semiconductors and medicine. But paying tariffs on Italian shoes, ladies handbags, and Mexican avocados doesn't advance our strategic interests and only hurts America consumers.

I started getting emails and text this week from a company saying their prices were going up due to tariffs. Everything was going up $5 and most products are in the $20-50 range.

He should eliminate income taxes completely and pay for everything via tariffs.

Tom Fox said:

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He should eliminate income taxes completely and pay for everything via tariffs.

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100% consumption based tax is ok with me.

But D's wouldn't be able to argue their "rich people don't pay their fair share" bs, so they'll never go for it.

But it would be as fair as fair gets

pfo said:

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I voted for Trump 3 times, but tariffs are a tax on the America people. However taxes aren't inflationary so I doubt tariffs will be either after the initial hit. Frankly I completely understand we need a thriving steel industry, we need to make our own ships, aircraft, weapons, semiconductors and medicine. But paying tariffs on Italian shoes, ladies handbags, and Mexican avocados doesn't advance our strategic interests and only hurts America consumers.

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You make one of the better cases for some tariffs that I've heard. I agree with you on protecting industries that are critical to our defense and national welfare, like steel, shipbuilding, etc. But the list is fairly short, and yes it doesn't apply to those Amazon consumer items that are a dime a dozen. Cheap foreign goods for the non important stuff is good for the American consumer.

And there's something to be said for not putting up tariffs on the non-strategic industries because our companies and labor need to be competitive... we can't let them sit on their duff and collect big checks that get passed on to the rest of us just because of tariffs. The car industry is one example that I don't believe is strategic. I don't care where my car or truck comes from.

The key point is we should more strategic with what we tariff. Just because a pound of it can be good in certain situations doesn't mean that a ton of it spread across everything is better.

MemphisAg1 said:

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DCAggie13y said:

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It's a new consumption tax. We are 2 Trillion in the hole and BBB cut income taxes so we need more revenue. I prefer consumption taxes over income taxes and we will likely need more of both in the near future since neither party can cut spending.

The taxpayers save $300B in interest payments for every 1% reduction in interest rates. So the push for the new tax and lower rates is aimed at reducing the insane deficit.

Now we just need Congress to do their part and cut spending.

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Other than tax on tips and a few other gimmicks, they didn't cut taxes much. They just extended current rates.

Trump and Congress had their chance to cut spending with BBB, gave it the middle finger instead, and will add $3T or more to the debt above the current run rate.

This new "consumption tax" -- if that's what we're calling it -- will just reduce consumption. When you tax something, you get less of it.

It's not in the Fed's mandate to minimize interest on the debt. They are charged with price stability (low inflation and full employment. It's the job of Congress and the president to minimize interest on the debt by keeping spending and taxes in balance, which they refuse to do.

We might look back five years from now and say this was pure genius on Trump's part and the majority of critical thinkers got it wrong. Maybe, but I wouldn't bet on it. He said Chyna would pay the tariffs and he's been proven wrong, so I don't put a lot of stock into his other statements on this topic.

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The ONLY reason why the BBB was scored to "add $3T or more" was that the CBO (and other left leaning organizations) count those extended current rates as a loss of revenue that will cause the debt to rise.

There is NO NET SPENDING in it.

Now, I don't believe for a second that extending the tax cuts will increase the debt like the CBO (and other left leaning organizations) say they will, though.

Not sure I understand what you're saying. If our total spending exceeds our tax revenue over the period by $3T, then that is adding to the national debt and Congress/Trump are responsible for it. Since tax revenue stays roughly flat, that means they would have had to cut $3T in spending to avoid adding to the debt, and they didn't do that, which is on them.

Not a week goes by that some trading partner does t fall in line. China will come around in the usual predictable way: The US gets a few concessions (every little bit counts) and the ChiComs can "save face" by saying they didn't cave in to US demands.

MemphisAg1 said:

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DCAggie13y said:

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It's a new consumption tax. We are 2 Trillion in the hole and BBB cut income taxes so we need more revenue. I prefer consumption taxes over income taxes and we will likely need more of both in the near future since neither party can cut spending.

The taxpayers save $300B in interest payments for every 1% reduction in interest rates. So the push for the new tax and lower rates is aimed at reducing the insane deficit.

Now we just need Congress to do their part and cut spending.

---

Other than tax on tips and a few other gimmicks, they didn't cut taxes much. They just extended current rates.

Trump and Congress had their chance to cut spending with BBB, gave it the middle finger instead, and will add $3T or more to the debt above the current run rate.

This new "consumption tax" -- if that's what we're calling it -- will just reduce consumption. When you tax something, you get less of it.

It's not in the Fed's mandate to minimize interest on the debt. They are charged with price stability (low inflation and full employment. It's the job of Congress and the president to minimize interest on the debt by keeping spending and taxes in balance, which they refuse to do.

We might look back five years from now and say this was pure genius on Trump's part and the majority of critical thinkers got it wrong. Maybe, but I wouldn't bet on it. He said Chyna would pay the tariffs and he's been proven wrong, so I don't put a lot of stock into his other statements on this topic.

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Yes, it is a consumption tax on foreign goods only and the goal is to reduce consumption of foreign goods by taxing them and increase consumption of domestic goods. The primary goal of the tariffs was not to raise taxes but rather to reduce consumption of foreign goods. Tax revenue is a side benefit.

Agree with you on the role of the Fed. Was just pointing out why they want rates lower. Low interest rates and massive deficits is what got us into this mess.

DCAggie13y said:

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It's a new consumption tax. We are 2 Trillion in the hole and BBB cut income taxes so we need more revenue. I prefer consumption taxes over income taxes and we will likely need more of both in the near future since neither party can cut spending.

The taxpayers save $300B in interest payments for every 1% reduction in interest rates. So the push for the new tax and lower rates is aimed at reducing the insane deficit.

Now we just need Congress to do their part and cut spending.

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You could raise all the revenue you want it won't matter

Trust Trump

YouBet said:

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Not sure anyone can tell what tariffs are going to do. WSJ just had an article over weekend that tariffs have not had the negative impact everyone thought and most people have downgraded their negative assumptions about tariffs.

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negative effects of tariffs have been minimal so far because TACO, thankfully

even so, we'd be much better off if he got rid of the ones he's put in place

DCAggie13y said:

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MemphisAg1 said:

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DCAggie13y said:

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It's a new consumption tax. We are 2 Trillion in the hole and BBB cut income taxes so we need more revenue. I prefer consumption taxes over income taxes and we will likely need more of both in the near future since neither party can cut spending.

The taxpayers save $300B in interest payments for every 1% reduction in interest rates. So the push for the new tax and lower rates is aimed at reducing the insane deficit.

Now we just need Congress to do their part and cut spending.

---

Other than tax on tips and a few other gimmicks, they didn't cut taxes much. They just extended current rates.

Trump and Congress had their chance to cut spending with BBB, gave it the middle finger instead, and will add $3T or more to the debt above the current run rate.

This new "consumption tax" -- if that's what we're calling it -- will just reduce consumption. When you tax something, you get less of it.

It's not in the Fed's mandate to minimize interest on the debt. They are charged with price stability (low inflation and full employment. It's the job of Congress and the president to minimize interest on the debt by keeping spending and taxes in balance, which they refuse to do.

We might look back five years from now and say this was pure genius on Trump's part and the majority of critical thinkers got it wrong. Maybe, but I wouldn't bet on it. He said Chyna would pay the tariffs and he's been proven wrong, so I don't put a lot of stock into his other statements on this topic.

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Yes, it is a consumption tax on foreign goods only and the goal is to reduce consumption of foreign goods by taxing them and increase consumption of domestic goods. The primary goal of the tariffs was not to raise taxes but rather to reduce consumption of foreign goods. Tax revenue is a side benefit.

Agree with you on the role of the Fed. Was just pointing out why they want rates lower. Low interest rates and massive deficits is what got us into this mess.

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If the foreign goods are cheaper and the replacement domestic goods are more expensive, then it's a higher net cost to the consumer. Very hard to see how this doesn't reduce the buying power of the consumer's domestic dollar and depress economic activity.

As another practical matter, some of these goods aren't even available from domestic suppliers. And some of them are low-end stuff that we really don't want to make here in the first place.

The other poster had it right when they said we should be strategic about what we tariff. Maybe it does make sense to protect our steel and shipbuilding industries. But cheap t-shirts and tennis shoes from China? Iphones even? Probably not.

The approach doesn't seem like it was considered thoughtfully. Instead of a targeted tariff campaign to shore up strategic industries, we're getting the broadcast approach that will leave a lot of collateral damage.

Consumers will only buy and pay for what theiy want.

Rule #1 is the forecasts are always wrong, more so when the rules are changing everyday. Literally everyone is guessing at this point and the White House knows they are the only ones who have the play book.

The other thing to be cognizant of is the economic scaffolding we will have at the end of this administration is going to be massively different than what it has been for the last 40-60 years. They are piecemeal doing it right now so markets can digest and adjust, but the tariffs are basically step one of many, so buckle in.

(and buy gold)

Tariffs always lead to loss of demand with the exporting country ultimately eating a lot of it when they inevitably have to drop prices to entice demand back up.

Here's why I don't believe anything they say:

During the 2008 financial crisis, Goldman Sachs faced significant criticism and legal challenges related to its role in the subprime mortgage market. The firm was accused of misleading investors and profiting from the market's collapse, ultimately leading to a $550 million settlement with the SEC in 2010. Additionally, Goldman Sachs received a $10 billion TARP bailout and transitioned to a bank holding company to access further emergency funding.
Here's a more detailed breakdown:
Criticisms and Investigations:
Misleading Investors:
Goldman Sachs was accused of misrepresenting the quality of mortgage-backed securities to investors, while simultaneously betting against those same securities.
Profit from Collapse:
The firm was criticized for allegedly profiting from the collapse of the mortgage market, including through complex financial instruments like collateralized debt obligations (CDOs).
SEC Settlement:
In 2010, Goldman Sachs paid a $550 million settlement to the SEC to resolve charges of misleading investors about mortgage-backed securities.
TARP Bailout:
Goldman Sachs received a $10 billion bailout through the Troubled Asset Relief Program (TARP), intended to stabilize the financial system.
Transition to Bank Holding Company:
The firm also became a bank holding company, supervised by the Federal Reserve, to access additional liquidity and funding sources.

Waiting for trump simps to tell us why this is actually a good thing.

Im anti-tariff, but I'm interested to see the medium term effects of Trump's tariff policy. In a perfect world, free trade is indisputably the best way to grow the economy. However, in our current world of insane debt, tariffs are an interesting counter position to the idea of growing our economy out of its hole as that may not be possible at this point. Effectively, it's the implementation of a consumption tax. If we can maintain modest economic growth and avoid significant inflation, tariffs could actually provide a long term off ramp for our debt crisis.

There are a lot of variable at play, but it will be interesting to see how it plays out. Will the economy grow as quickly? No. But the economy most likely can't outgrow our debt crisis at this point, so this policy might provide a much less costly solution than the alternative.

Does this really surprise anyone?

Goldman Sachs is no beacon of truth.

MemphisAg1 said:

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Not sure I understand what you're saying. If our total spending exceeds our tax revenue over the period by $3T, then that is adding to the national debt and Congress/Trump are responsible for it. Since tax revenue stays roughly flat, that means they would have had to cut $3T in spending to avoid adding to the debt, and they didn't do that, which is on them.

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A cut in tax rates does not necessarily mean a cut in tax revenue. If it spurs economic growth, it can actually mean an increase in tax revenues.