Fed Chair Warns of Economic Consequences from Import Tariffs.

Jerome Powell believes import tariffs are steering the U.S. economy toward slower growth, rising unemployment, and higher inflation.

At an event hosted by the Economic Club of Chicago on April 16, U.S. Federal Reserve Chairman Jerome Powell stated that major policy changes by President Donald Trump, including import tariffs, are unprecedented in modern history. These changes are placing the Fed in an entirely new situation.#Vietnam Freight forwarder#freight forwarding#cargo courier service#international shipping companies#shipping service company

“These are fundamental shifts. We have no modern experience to draw from,” Powell said. He acknowledged that the recently announced tariff increases are significantly larger than previously forecast and that prolonged uncertainty surrounding trade policy could cause lasting economic damage.#Vietnam Freight forwarder#freight forwarding#cargo courier service#international shipping companies#shipping service company

Trump’s tax policy is pushing the economy toward slower growth, higher unemployment, and elevated inflation—three developments occurring simultaneously. This is a situation the Fed has not faced in nearly 50 years. “The Fed could find itself in a tough spot where its dual mandate objectives conflict with each other,” he added.

Jerome Powell at a press conference in Washington. Photo: Reuters

The U.S. stock market plunged following Powell’s remarks. At the close of trading on April 16, the Dow Jones Industrial Average dropped 700 points (equivalent to 1.7%), the S&P 500 fell 2.5%, and the Nasdaq Composite tumbled 3.5%.

The Fed’s mandate is to promote employment and control inflation. Powell believes Trump’s tax policies threaten both of these goals. However, according to the latest data, the U.S. economy remains stable for now.#Vietnam Freight forwarder#freight forwarding#cargo courier service#international shipping companies#shipping service company

Powell noted that the Fed will not adjust its policy immediately. They need more data to clearly determine the impact of these new policies on the economy.

Nevertheless, most economists predict that a scenario involving rising inflation, increasing unemployment, and weakening growth is only a matter of time—especially if retaliatory tariffs take effect after 90 days. So far, Trump has announced a 25% tariff on aluminum and steel; a 25% tariff on goods from Mexico and Canada; a 145% tariff on Chinese imports; and a 25% tariff on passenger cars, small trucks, and auto parts. All of America’s trading partners now face a 10% tariff when selling goods to the U.S.

“Jerome Powell just issued a clear warning to Trump about the risks of high inflation and slow growth. It was also a statement that the Fed will not cut interest rates at the request of the White House,” said David Russell, Global Market Strategy Director at TradeStation.#logistic service#freight and logistics services#logistic service#freight and logistics services#logistics companies#shipping international#vietnam cfs#local agent#customs broker#combined truck#crostrade#cfs warehouse#non commercial#cargo#no permit

Trump has repeatedly claimed that foreign countries will pay the tariffs. However, the Fed Chair emphasized that this is not true. He explained that import tax policies will lead to higher unemployment as the economy slows down. “Inflation is also likely to rise. In other words, part of the burden of import tariffs will be borne by the American people,” he said.

In the 1970s and early 1980s, the U.S. economy experienced a period of both high unemployment and high inflation. At that time, Fed Chair Paul Volcker prioritized controlling inflation, even at the cost of economic pain.#logistic service#freight and logistics services#logistic service#freight and logistics services#logistics companies#shipping international#vietnam cfs#local agent#customs broker#combined truck#crostrade#cfs warehouse#non commercial#cargo#no permit

Many current forecasts indicate that the U.S. economy is heading in a similar direction. Last week, Chicago Fed President Austan Goolsbee said at an event in New York that Trump’s tax policies are placing the Fed in a similarly difficult position.

“Import tariffs are a supply shock. They simultaneously worsen both of the Fed’s goals. Prices rise, employment declines, and growth weakens. There is no playbook for the Fed to deal with this kind of shock,” he said.#logistic service#freight and logistics services#logistic service#freight and logistics services#logistics companies#shipping international#vietnam cfs#local agent#customs broker#combined truck#crostrade#cfs warehouse#non commercial#cargo#no permit

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