Goldman Sachs: Trump's tariffs on Canada will have a "significant" impact on the United States
Goldman Sachs warned that Trump's proposed 25% tariff on Canada would have a significant impact on American consumers, potentially leading to a rise in fuel prices and a 0.9% increase in core PCE inflation. While the tariff may be a negotiation tactic, its implementation remains uncertain, but it is expected to significantly raise consumer prices. Goldman Sachs analysis pointed out that the tariff would affect American consumers, refiners, and Canadian producers, and reiterated the 2025 Brent crude oil price forecast of $76 per barrel
According to Zhitong Finance, Goldman Sachs stated that U.S. consumers face "significant consequences" from President-elect Trump's proposed tariffs on Canada, and the bank is skeptical about their implementation. Daan Struyven, head of commodity research at Goldman Sachs, mentioned in a roundtable interview that Trump's proposal to impose a 25% tax on all products from Canada could raise fuel prices in the U.S. He added that this strategy is reminiscent of Trump's first term and may serve as a negotiation tool.
Struyven stated on Wednesday that the tariffs "could theoretically have quite severe consequences for three groups: U.S. consumers, U.S. refiners, and Canadian producers." He further noted, "Given Trump's focus on lowering energy costs, we believe it is unlikely that Canada will impose tariffs."
Additionally, Goldman Sachs analysis pointed out that President-elect Trump proposed a 25% tariff on goods from Canada and Mexico, which is expected to generate nearly $300 billion in revenue annually but could lead to a 0.9% increase in core PCE inflation. Goldman Sachs Chief Economist Jan Hatzius stated that this tariff would significantly raise consumer prices. While the tariff proposal may be a negotiation strategy by Trump, its implementation remains uncertain, but market expectations for a Federal Reserve rate cut have begun to weaken.
The U.S. imports nearly 4 million barrels of Canadian crude oil daily, allowing U.S. producers to export more of their own oil. The CEO of the Canadian Association of Petroleum Producers stated that the tariffs would lead to higher gasoline and energy costs for U.S. consumers.
Other key points from Goldman Sachs' briefing include: Iranian oil flows face the risk of tightening sanctions, OPEC seems to be defending a price floor of $70 per barrel, OECD inventories are 4% below historical averages, and China and the U.S. may continue to replenish strategic reserves. Therefore, Goldman Sachs reaffirmed its forecast of $76 per barrel for Brent crude oil prices in 2025