President Trump is set to announce his latest tariffs on Wednesday afternoon. Yahoo Finance Federal Reserve Reporter Jennifer Schonberger breaks down how tariffs could impact the Federal Reserve and its fight against inflation.
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Today is the day that Fed officials, consumers, and businesses will finally get clarity on President Trump's tariffs. Businesses have been holding back on hiring and investment because of lack of clarity around the president's policies. Likewise, Fed officials have characterized the outlook for the economy as uncertain because of uncertainty surrounding the president's tariffs. Though Fed officials do see higher inflation and lower growth this year. New York Fed President John Williams told me in an interview this week, he doesn't see stagflation now, but noted there's definitely a risk of inflation being higher than forecast of 2.8%, which is where inflation stands right now. Williams told me there's the potential for long-lasting effects on inflation from tariffs. Take a listen.
Those, you know, uh, increased cost for American producers, it takes some time for those to get into consumer prices and show up in inflation. So, there's definitely a channel that past history teaches us may take a few years to be fully uh, uh, kind of, you know, seen in the data.
Meanwhile, Goldman Sachs and JP Morgan have increased their odds for a recession this year on anticipation of larger tariffs. The president has not ruled out the possibility of a recession saying that Americans could experience short-term pain, while Treasury Secretary Scott Besen has said there could be an adjustment. Administration officials refute that inflation will result from tariffs, though they admit there could be a one-time adjustment in prices, though they argue this is what's necessary to bring in a new economic era of growth for the United States. The president will make the official announcement at 4:00 p.m. today in the Rose Garden at the White House after the market closes.
