Video: Fed Chair Says Trump Tariffs Could Worsen Inflation

The level of tariff increases announced so far is significantly larger than anticipated, and the same is likely to be true of the economic effects, which will include higher inflation and slower growth. We may find ourselves in the challenging scenario in which our dual mandate goals are in tension. If that were to occur, we would consider how far the economy is from each goal and the potentially different time horizons over which those respective gaps would be anticipated to close. These are very fundamental changes in — long-held in some cases — policies in the United States, and there’s not any real experience. I mean, the Smoot-Hawley tariffs were actually not this large and they were 95 years ago. So there isn’t a modern experience of how to think about this. And businesses and households are saying in surveys that they are experiencing incredibly high uncertainty. I mean, your question really is what if the uncertainty remains high? I think that’s a difficult environment. If the United States were to become a jurisdiction where risks are just structurally higher going forward, that would make us less attractive as a jurisdiction. We don’t know that at this point. But I think that would be the effect.