Trump’s tariffs will likely raise US prices, Fed chair says

(WASHINGTON) — Fed Chair Jerome Powell said on Friday that the Trump administration’s tariffs would likely raise prices for U.S. shoppers and retailers.

The scale and duration of the tariffs remain unclear but a portion of the taxes on imports will probably reach consumers, Powell told an economic forum in New York City on Friday.

“We’re at a stage where we’re still very uncertain about what will be tariffed, for how long, at what level,” Powell said. “But the likelihood is some of that will find its way. It will hit the exporters, the importers, the retailers and to some extent consumers.”

The Trump administration slapped 25% tariffs on goods from Mexico and Canada, as well as 10% tariffs on imports from China. The fresh round of duties on Chinese goods doubled an initial set of tariffs placed on China last month.

Tariffs of this magnitude are widely expected to increase prices paid by U.S. shoppers, since importers typically pass along a share of the cost of those higher taxes to consumers.

“Everybody is forecasting some inflation effect from tariffs,” Powell said on Friday.

The remarks from Powell at the annual US Monetary Policy Forum marked a notable prediction from the nation’s top central banker charged with keeping inflation under control.

While acknowledging the likelihood of price hikes, however, Powell said the Fed’s response would depend on what exactly transpires.

A potentially temporary bump in prices may not warrant intervention, while a more sustained increase could require action, Powell said, noting that the strength of the economy affords the Fed time to assess the impact.

“In some cases, where we think it’s a one-time thing, the textbook would be to look through it,” Powell said. “If it turns into a series of things and it’s more than that — [and] if the increases are larger — that would matter.”

Powell spoke hours after Trump on Truth Social threatened to slap tariffs, sanctions and other measures on Russia in response to conduct in the war with Ukraine.

The tariffs may become necessary “based on the fact that Russia is absolutely ‘pounding’ Ukraine on the battlefield right now,” Trump said.

The potential move could expand Trump’s confrontational trade policy beyond an initial set of countries targeted this week.

Later on Friday, Trump told reporters at the White House that tariffs could cause “some disturbance” for the U.S.

The Trump administration has eased some of the tariffs against Canada and Mexico in recent days.

Trump issued a one-month delay for tariffs on auto-related goods from Mexico and Canada. The carve-out expanded soon afterward with an additional one-month pause for goods from Mexico and Canada compliant with the United States-Mexico-Canada Agreement, or USMCA, a free trade agreement.

In addition to tariffs, Powell mentioned other economic proposals pursued by the Trump administration, including measures affecting fiscal policy and regulation.

“The new administration is in the process of implementing significant policy changes,” Powell said. “Uncertainty around these changes and their likely effects remains high. We are focused on parsing the signal from the noise as the situation evolves. We are not in a hurry.”