President Trump's high tariffs could cause U.S. recession, prompting Fed to balance inflation risks.

From Yahoo Finance: 2025-04-03 11:18:00

President Trump’s unveiling of sweeping tariffs, with rates as high as 50%, has economists predicting a U.S. recession. The average import tax rate has jumped from 2.5% to 27%, causing concerns of stagflation. Fed officials are wary of rising inflation and potential economic slowdown. Markets reacted sharply, with major indexes dropping at least 3%. Investors anticipate Fed interest rate cuts amid weakened growth prospects. Uncertainty around trade weighs on household and business investment. Inflation expectations are rising, prompting calls for the Fed to stay on hold. The central bank faces tough decisions amidst heightened risks.



Read more at Yahoo Finance: With tariff details in hand, Fed now has to weigh inflation risks against blow to growth