It is now broadly accepted that U.S. households have already been absorbing at least some portion of trade war costs.
But Goldman Sachs’ latest modeling suggests the burden is a heavy one. In a recent client note widely cited on Monday, Goldman economists estimate that consumers will ultimately bear more than 50% of the total cost of the U.S. tariff regime. (As of mid-year, consumers had shouldered only about 22%.)
That shift comes amid policy whiplash. In recent weeks, the administration announced plans to hike tariffs on China well beyond 100%, raising the stakes for businesses and consumers alike. The volatility means firms face high uncertainty about future sourcing and cost structures and many appear to be acting on the assumption that tariff costs will not recede anytime soon.
Merchants Push Costs to Consumers
Retailers and goods firms are on the front lines of translating macro trade policy into point-of-sale pain. PYMNTS found that 1 in 3 U.S. consumers said a retailer explicitly cited “tariffs” as the reason for higher prices, while another nearly 25% heard vague references to “increased costs.”
More broadly, recent PYMNTS Intelligence research indicates that 90% of goods firms have raised prices over the past 12 months in response to macro pressures, including tariffs. And as detailed here, 29% of middle-market companies increased product or service prices, and 21% renegotiated with suppliers. Others discontinued tariff-affected SKUs (18%) or built domestic supply (14%), evidence of workarounds paired with sourcing shift.
Trade Down, Trade Off, Delay
Tariffs are no longer an abstract national policy debate; they are influencing everyday consumer behavior. PYMNTS Intelligence, cited here by PYMNTS CEO Karen Webster, shows that over 80% of consumers have already modified their spending in anticipation of higher prices, with the average shopper making nearly five changes to their purchasing habits.
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In one recent study, 44% of consumers reported explicitly altering shopping behaviors because of expected tariff-driven price increases. Among these, many are trading down, migrating from branded to generic goods, selecting lower-cost merchants, and cutting nonessential purchases. In fact, 42% of survey respondents say they have redirected spending toward cheaper retailers, and in grocery/dining, many are consuming more at home.
Balancing Act Ahead
The central tension businesses now face is how much they can absorb versus how much they can pass on without triggering consumer backlash or demand destruction. As the Federal Reserve Bank of Minneapolis said last week, the pass-through is unlikely to be instantaneous or uniform.
Meanwhile, consumers are treating tariffs as a de facto cost of doing business in the digital economy, factoring them into everyday purchasing decisions and rebalancing spending accordingly. For banking, payments, FinTech and commerce executives, the lesson is clear: Tariffs are no longer a secluded policy issue; they are fast becoming a dimension of consumer expectations, pricing strategies, and margin risk management.
In this shifting environment, the path that firms choose, whether to absorb, pass, redesign or reposition, will be a litmus test of how adaptive and resilient their models really are.