Tariffs are back in the spotlight, and not in a good way. The Fed, already tiptoeing around inflation, now faces an added headache as tariff threats expand beyond China to Mexico, Canada, and beyond. While tariffs are supposed to protect domestic industries, they tend to do a better job of inflating prices for consumers—because, of course, nothing says “economic strength” like making everything more expensive. Fed officials are worried that this unpredictable trade policy could disrupt supply chains and keep inflation running hotter than they’d like. With the Fed still aiming for its 2% target, the real question is whether they’ll have to step in with rate adjustments to counteract the inflationary ripple effects of these policies. It’s a delicate balancing act, and as history has shown, trade wars are rarely the “easy to win” battles they’re made out to be. We identify a couple articles that might pique your interest in this topic and provide some additional clarity.
Key Topics for This Month
TARIFF THREATS
Fed Concerns Rise as Tariff Threats Ratchet Higher and Wider
U.S. Federal Reserve officials remain uncertain about the impact tariffs might have on inflation, but have begun outlining more serious risks to supply chains, public expectations and ultimately prices as the scope of the Trump administration’s plans for import taxes has become clearer…
INFLATION RISKS
How Tariffs Add to Inflation Ricks for the Fed
As the Federal Reserve focuses on hitting its 2% annual inflation goal, some government policies may complicate its decision making. Tariffs are likely to increase some domestic prices, though their scope remains unclear. Chinese tariffs are implemented but others are paused or not yet in effect…
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