The latest tariff proposal from President-elect Donald Trump would likely put upward pressure on inflation in the United States, according to Goldman Sachs.

On Monday, Trump said on social media site Truth Social that he would impose an additional 10% tariff on goods from China and a 25% duty for Canada and Mexico. Goldman chief economist Jan Hatzius said in a note that the proposed levies would result in a notable increase for consumer prices in the U.S..

“Using our rule of thumb that every 1 [percentage point] increase in the effective tariff rate would raise core PCE prices by 0.1%, we estimate that the proposed tariff increases would boost core PCE prices by 0.9% if implemented,” Hatzius said.

“PCE” refers to the personal consumption expenditures price index. The core PCE, which strips out food and energy prices, is the preferred inflation reading of the Federal Reserve.

A tariff-linked increase in core PCE could scramble the calculations around Fed rate cuts. The October PCE reading is due out on Wednesday, and it’s expected to show a year-over-year increase of 2.8% for core, according to economists surveyed by Dow Jones. In other words, inflation is still above the Fed’s target of 2%, and the tariffs could widen that gap.

Traders have been dialing back their expectations for Fed rate cuts in 2025, though it is unclear how much of that is due to election results versus a resilient U.S. economy. Fed Chair Jerome Powell has said the central bank will consider the impact of tariffs and other fiscal policy changes on the direction of inflation once the details become clear.

To be sure, it remains to be seen whether the tariffs will actually be implemented at the levels Trump proposed — or what exceptions might be made. The President-elect suggested in his social media post that the tariffs were conditional on changes to immigration policy and drug enforcement, specifically fentanyl. Some of Trump’s advisors and supporters have characterized the tariffs he proposed during the campaign as a bargaining position rather than a set policy.

Hatzius, for his part, said it seems more likely that Canada and Mexico would avoid across-the-board tariffs than China.

The three countries in question account for 43% of U.S. goods imports, and the tariffs would result in slightly less than $300 billion in revenue annually, according to Goldman Sachs calculations.