Jerome Powell’s 10 warning shots at Trump’s tariff war: Fed Chair pushes back

United States Federal Reserve Chairperson Jerome Powell

US Federal Reserve Chair Jerome Powell held little back in his latest press briefing, firing a series of pointed warnings about the economic risks posed by President Donald Trump’s aggressive tariff strategy. While reaffirming that the US economy remains broadly healthy for now, Powell painted a picture of growing fragility, driven largely by policy uncertainty and trade tensions.

The Fed held interest rates steady for the fourth consecutive meeting on Wednesday, but its updated policy statement and Powell’s subsequent comments signaled growing unease. From declining sentiment and business hesitation to rising risks of stagflation, Powell made it clear that Trump’s tariff war could derail the central bank’s progress toward its dual mandate: price stability and maximum employment.

Here are the 10 most significant warning shots Powell fired at Trump and his tariffs during his post-policy briefing:

1. Trump’s pressure on rate cuts has “no effect at all” on the Fed

Responding to Trump’s repeated calls for lower interest rates, Powell firmly asserted the Fed’s independence. “We are always going to do the same thing... use our tools to foster maximum employment and price stability... That’s all we are going to consider,” he said, adding that political pressure has “no effect at all” on the Federal Open Market Committee’s decisions.

Also read: US Fed keeps interest rate unchanged amid uneconomic concerns, flags inflation risk

2. Fed’s policy stance is appropriate despite tariff threats

Powell defended the Fed’s current pause, even as Trump’s tariffs introduced new headwinds. “We believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments,” he said, acknowledging that the risks of both higher unemployment and inflation have increased.

3. Tariffs could derail economic progress for the next year

Powell cautioned that if the tariffs remain in place at current levels, they could delay the Fed’s ability to meet its inflation and employment goals for “at least the next year.” He noted, “We would not be making progress toward those goals… if that’s the way the tariffs shake out.”

4. Powell directly links tariffs to potential rise in inflation and joblessness

“If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment,” Powell said bluntly. He also warned these effects could be long-lasting depending on how the situation evolves.

5. Trump’s tariff policy is why “we are where we are”

In one of his most direct statements, Powell said: “You have to just take a step back and realize, this is why we are where we are.” The Fed chair made it clear that Trump’s tariffs are at the root of the current uncertainty clouding the Fed’s outlook and limiting its ability to predict future rate actions.

6. Mood has soured across households and businesses

Powell said sentiment has taken a hit across the board. “Surveys of households and businesses reported a sharp decline in sentiment and elevated uncertainty about the economic outlook, largely reflecting trade policy concerns,” he said. This negative mood could lead to delayed spending and investment decisions.

7. Economy could worsen — “It may well” happen

While noting that the economy remains “healthy,” Powell acknowledged the risks are building. “It’s possible to imagine the economy will get worse,” he said, adding that if sentiment doesn’t improve, it “would begin to show up in economic data... over weeks and months.”

8. Tariffs were “significantly larger than anticipated”

Powell highlighted that the size and scope of the tariff hikes have far exceeded expectations. “The tariff increases announced so far have been significantly larger than anticipated,” he said. The evolving nature of these policies adds to the Fed’s challenge in forecasting future outcomes.

9. Fed’s goals could be harder to meet if tariffs stay high

Powell noted that high, sustained tariffs could make it difficult for the Fed to maintain low inflation and strong job growth. “We won’t see further progress toward our goals,” he warned, especially if the economic drag from trade policy proves more persistent than initially expected.

10. Powell says the economy now hinges on Trump’s trade diplomacy

“The path ahead depends critically on trade talks,” Powell said, referring to the Trump administration’s ongoing negotiations with key global partners. He added, “It certainly could change the picture, and we’re mindful of not trying to make conclusive judgments when the facts are changing.”

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