As tariffs go from idea to reality, what might be the actual implications for the U.S. economy?
I'm Allison Nathan, and this is Goldman Sachs Exchanges.
Today I'm joined by David Merical, our Chief U.S. Economist in Goldman Sachs Research.
He joins me over the phone from Doha.
David, welcome back to Exchanges.
Thanks Allison.
Great to be back.
So, David, there are so many tariff headlines coming at us.
Help us cut through all of this.
Where does the picture stand now and how has that changed from your prior expectations?
Sure, the tariffs that are now in effect raise the U.S.'s effective tariff rate by somewhere around 3 percentage points.
Between election day and inauguration day, that's more or less what we were expecting.
So, the tariffs that have already taken effect are not necessarily larger,
but we have raised our expectations for what will eventually come into place.
Some of that was just seeing
that they were willing to go ahead initially with these tariffs on Canada and Mexico and pulling them back.
Some of it is commentary from President Trump and others in the administration that has made us think
that a tariff on critical imports and a meaningful reciprocal tariff are probably also coming,
maybe something on autos,
and that all of this is going to wind up adding up to a more substantial increase than we expected.