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Wednesday, Aug 12, 2026
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US Federal Reserve Chair Issues Warning on Tariff Impact
Federal Reserve Chair Jerome Powell cautions that tariffs could lead to higher inflation and slower growth, posing challenges for the US economy
The US Federal Reserve Chair, Jerome Powell, has expressed concerns about the potential impact of tariffs on the US economy.
In a speech at the Economic Club of Chicago on April 16, Powell stated that the level of tariff increases announced so far is significantly larger than anticipated, and the economic effects will likely include higher inflation and slower growth.
The tariffs have already led to increased inflation expectations, with survey participants pointing to tariffs as a key factor.
The Fed's dual mandate to achieve maximum employment and stable prices may be in tension due to the tariffs, potentially leading to a challenging scenario for the agency.
Powell described the recent policy changes as 'very fundamental' and noted that it is difficult to find a similar event in history.
The US has imposed a 10% base tariff on goods from all countries except China, with additional tariffs on certain products such as aluminum, steel, and key automobile parts.
China has retaliated with its own tariffs on US goods, including a 125% tariff.
The trade tensions between the US and China have led to significant market volatility, with the Dow Jones Industrial Average closing down 1.6% and the Nasdaq Composite falling 3.1% on April 16. The US Treasury Secretary has indicated that the administration may have 'substantial clarity' about trade agreements with most of the country's large trading partners, except China, before the current tariff pause ends.
In a speech at the Economic Club of Chicago on April 16, Powell stated that the level of tariff increases announced so far is significantly larger than anticipated, and the economic effects will likely include higher inflation and slower growth.
The tariffs have already led to increased inflation expectations, with survey participants pointing to tariffs as a key factor.
The Fed's dual mandate to achieve maximum employment and stable prices may be in tension due to the tariffs, potentially leading to a challenging scenario for the agency.
Powell described the recent policy changes as 'very fundamental' and noted that it is difficult to find a similar event in history.
The US has imposed a 10% base tariff on goods from all countries except China, with additional tariffs on certain products such as aluminum, steel, and key automobile parts.
China has retaliated with its own tariffs on US goods, including a 125% tariff.
The trade tensions between the US and China have led to significant market volatility, with the Dow Jones Industrial Average closing down 1.6% and the Nasdaq Composite falling 3.1% on April 16. The US Treasury Secretary has indicated that the administration may have 'substantial clarity' about trade agreements with most of the country's large trading partners, except China, before the current tariff pause ends.