Goldman sachs chief economist cautions on impacts of increases US tariffs

NEW YORK, July 4 (Bernama-Xinhua) — The actual implementation of former US President Donald Trump’s plan would negatively impact economic growth and could prompt the Federal Reserve to raise interest rates by as much as 130 basis points, according to Goldman Sachs Chief Economist Jan Hatzius, reported Xinhua.

Hatzius stated at a banking industry meeting that if the US imposes a 10 per cent tariff on all imported goods and other countries reciprocate, inflation in the United States could rise by 1.1 percentage points.

Even if tariff revenue is entirely recycled into tax cuts, Hatzius projected that the US gross domestic product would suffer a 0.5 percentage point contraction due to the tariffs.

In response to inflationary pressures due to higher tariffs, Hatzius anticipated that the Federal Reserve would need to increase interest rates by 130 basis points.

Trump floated the idea of imposing a 10 per cent tariff on all imported goods and 60 per cent of tariff on goods imported from China as he campaigns for the 2024 US presidential election.