Fed’s Kashkari says Trump tariffs could reheat inflation if they provoke global trade ‘tit for tat’

Fed’s Kashkari says Trump tariffs could reheat inflation if they provoke global trade ‘tit for tat’


Neel Kashkari, President and CEO, Federal Reserve Bank of Minneapolis, speaks at the Milken Conference 2024 Global Conference Sessions at The Beverly Hilton in Beverly Hills, California, U.S., May 7, 2024. 

David Swanson | Reuters

Minneapolis Federal Reserve President Neel Kashkari said Sunday that President-elect Donald Trump’s tariff proposals could worsen long-term inflation if global trade partners were to strike back.

One-time tariffs, Kashkari said on CBS’ “Face the Nation,” “shouldn’t have an effect long run on inflation.”

“The challenge becomes, if there’s a tit for tat and it’s one country imposing tariffs and then responses and it’s escalating. That’s where it becomes more concerning, and, frankly, a lot more uncertain,” Kashkari said.

During his first term, Trump essentially sparked a trade war with China when he imposed a series of import taxes on Chinese goods, which triggered the country to retaliate with its own set of tariffs on the U.S.

One of Trump’s primary economic proposals for his second term is to impose universal tariffs on all imports from all countries — with a specifically targeted 60% rate on China.

Economists, Wall Street analysts and industry leaders have repeatedly expressed concerns over the inflationary impact of that hardline trade approach, especially since inflation has just begun to cool from its pandemic-era peaks.

“We’ve made a lot of progress in bringing inflation down,” Kashkari said. “I mean, I don’t want to declare victory yet. We need to finish the job, but we’re on a good path right now.”

The Fed on Thursday passed its second consecutive interest rate cut, continuing its effort to loosen monetary policy as inflation approaches the central bank’s 2% target. Kashkari said he expects another cut to come in December, but that will depend on “what the data looks like” at that time.

As for Trump’s other major policy proposals like a sweeping immigrant deportation plan, Kashkari noted that the inflation threat is still unclear and so the Fed is still taking a “wait and see” approach before adjusting its policy.

Trump and his backers like billionaire Tesla CEO Elon Musk have also been outspoken about their desire to give the president input on Fed policy decisions. The central bank views its political independence as a core feature that allows it to shape monetary policy exclusively based on the health of the U.S. economy, not election incentives.

But Kashkari said he is not concerned about politics permeating Fed decisions.

“I’m confident that we will continue to focus on our economic jobs,” he said. “That’s what should be dictating what we’re doing and that is what’s dictating what we’re doing.”



Source

Nvidia shares slump 3% in premarket as quarterly revenue growth slows
World

Nvidia shares slump 3% in premarket as quarterly revenue growth slows

POLAND – 2024/11/13: In this photo illustration, the NVIDIA company logo is seen displayed on a smartphone screen. (Photo Illustration by Piotr Swat/SOPA Images/LightRocket via Getty Images) Sopa Images | Lightrocket | Getty Images Nvidia shares dropped in U.S. premarket trading Thursday after the tech giant’s third-quarter earnings failed to impress investors. Shares of the […]

Read More
Morgan Stanley CEO is bullish on stocks, says the U.S. economy is ‘outperforming’
World

Morgan Stanley CEO is bullish on stocks, says the U.S. economy is ‘outperforming’

Morgan Stanley CEO Ted Pick on Thursday expressed optimism about the stock market, saying that the U.S. economy will continue to outperform in 2025. “The world is still led by the U.S. consumer,” Pick told CNBC’s “Squawk Box Asia” from the Morgan Stanley summit in Singapore. “Corporate balance sheets in the U.S. are on aggregate, […]

Read More
Adani investor GQG Partners’ shares see worst day after Gautam Adani’s indictment
World

Adani investor GQG Partners’ shares see worst day after Gautam Adani’s indictment

Rajiv Jain, founder and chief investment officer of GQG Partners, during an interview in New York, US, on Tuesday, April 4, 2023. Christopher Goodney | Bloomberg | Getty Images Shares of Australia-listed GQG Partners plunged on Thursday to post their worst day on record, after Adani Group Chair Gautam Adani was charged with fraud in […]

Read More