“Trump’s customs policy will lead to inflation and slow down the growth of the US economy – Federal Reserve System (FRS)
Adriana Kugler stated that Trump’s customs policy will lead to increased inflation and slower economic growth. Even an agreement
with China will not remove the risks.”, — write: unn.ua
Trade policy is evolving and is likely to continue to change, as was achieved in the context of negotiations with China. Nevertheless, it seems that it has already led to a significant economic impact, even if tariffs remain close to the levels announced so far.
DetailsKugler emphasized that the average customs rates in the United States are still much higher than they were for many decades before the decisions of US President Donald Trump.
If tariffs remain significantly higher compared to the beginning of the year, a pessimistic forecast is likely to be true for the US economy. The consequences will include increased inflation and a slowdown in the country’s economic growth. Since inflation and employment are potentially moving in opposite directions in the future, I will closely monitor developments, considering the future path of regulation.
Kugler also stated that the temporary agreement between the US and China represents an “improvement”, but tariffs between the two countries are “still quite high”.
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Last week, the Fed left the central bank’s key interest rate unchanged for the third meeting in a row. Kugler stated that she supports this decision, given the risks of rising inflation, and also because she believes the Fed’s position is somewhat restrictive for the US economy.
Let us recallThe US and China have agreed to temporarily reduce tariffs on each other’s goods. This is done to ease trade tensions and allow time for dispute resolution.