Goldman Sachs ($GS) Analyzes Supreme Court's Tariff Ruling
The Goldman Sachs Group, Inc. ($GS) has raised concerns that the recent Supreme Court decision to strike down key Trump-era tariffs may not lead to a decrease in prices for consumers. This ruling, delivered on Friday in a 6-3 vote, invalidates tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
Initially, the White House implemented a 10% tariff via Section 122, which was later increased to 15%. In a note released on Sunday, Goldman Sachs indicated that consumers should not anticipate a reversal of prior price hikes associated with these tariffs.
Impact on Inflation
The firm's economists noted, "We would not expect companies to lower prices in response to tariff reductions nearly as quickly as they increased them in response to tariff increases," as reported by Business Insider. Goldman Sachs estimates that tariff passthrough has already raised core Personal Consumption Expenditures, the Federal Reserve's preferred inflation measure, by approximately 0.7% through January. They predict only a modest additional increase of 0.1% for the remainder of 2026.
Despite the elimination of some tariffs, Goldman expects the effective tariff rate since the beginning of 2025 to decrease only slightly from just over 10 percentage points to around 9 percentage points, leaving its broader inflation forecast largely unchanged.
Concerns Over Tariff Refunds
In light of the ruling, Treasury Secretary Scott Bessent expressed skepticism regarding the likelihood of refunds for about $180 billion in tariffs already collected, suggesting that Americans may not see this money returned. California Governor Gavin Newsom criticized the trade policies, labeling them as "madness" and advocating for refunds of the revenue collected.
Following the Supreme Court's ruling, U.S. Customs and Border Protection has ceased tariff collections under the IIEPA and disabled related tariff codes. However, tariffs under other provisions, including Section 232 and Section 301, remain unaffected.
U.S. Trade Representative Jamieson Greer affirmed that the White House would maintain its trade agreements with partners such as the European Union, Japan, and South Korea, emphasizing that these deals are not contingent on the court's ruling. While acknowledging reduced flexibility without IEEPA authority, he expressed confidence in the continuity of the broader tariff program.
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