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 Miracle, 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? Sir, the tariffs that are now in effect raise the U.S.'s

effective tariff rate by somewhere around three 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 tariffs 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. So actually, just last week,

we raised our tariff expectations. We had been expecting a four to five percentage point increase

in the effective tariff rate. Now we're expecting that it will all add up to about a 10 percentage point increase in the effective tariff rate. Now we're expecting that it will all add up to

about a 10 percentage point increase in the effective tariff rate. So that would be a larger

increase in the effective tariff rate than we had anticipated before the new administration took

office. So let's talk about the macro implications. Is inflation, which has been so much in focus,

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