Jerome Powell Vs Trump: Tensions Rise Over New Tariffs

Donald Trump recently triggered an economic shockwave by announcing new tariffs. In response, Jerome Powell, the chairman of the Federal Reserve (FED), warned that these measures could worsen inflation while slowing down growth. What will be the impact on interest rates? Find out here.

Jerome Powell concerned about Trump’s tariffs

On April 2, 2025, Donald Trump’s announcement regarding a new series of tariffs caused an immediate drop in financial markets. This decision, although anticipated by some, was perceived as a shock to many investors and economists, who fear a worsening of trade tensions. In response to this initiative, the President of the FED, Jerome Powell, expressed major concerns.

In a recent statement, Powell noted that the tariffs imposed by Donald Trump were more significant than expected and that they risk stimulating inflation while slowing down economic growth:

The slated tariff increases will likely have an inflationary impact in the coming quarters. While uncertainty remains, it is now evident that the tariff increases are more significant than anticipated, likely resulting in higher inflation and slower growth. The effects could last longer than expected.

What impact on interest rates?

The central question now is about the direction of the interest rates of the FED in response to this situation. So far, the Federal Reserve has opted for relatively low rates to stimulate the economy, but Trump’s recent decisions could force Jerome Powell and his colleagues to revisit this strategy. If Trump’s tariffs do indeed lead to inflationary pressure, it could prompt the FED to raise interest rates to contain price increases.

However, slower economic growth could also prompt the FED to take accommodative measures, such as rate cuts, to support economic activity. As a result, it is difficult to predict whether Powell will choose to raise or lower rates in the coming months. However, the balance between inflation and growth will be crucial in this decision.

This reaction from Jerome Powell comes 24 hours after France and Europe decided to counterattack against Trump’s tariffs! Highlighting the challenges that Europe and the American economy may face in the coming months. Investors and analysts will need to closely monitor upcoming developments to anticipate adjustments to US monetary policy.