Economists predict that tariffs will weaken the economy, possibly threaten hiring and increase prices
The additional 10% customs rate on most products that the United States imports from the rest of the world came into force at midnight (05:00 today in Lisbon).
This 10%rate, which covers 184 countries and territories and will be added to the existing customs rates, was announced by US President Donald Trump on Wednesday, creating a shock wave for global trade.
However, certain products are, for now, exempt: oil, gas, copper, gold, silver, platinum, palladium, wood, semiconductors, pharmaceutical products and minerals not found on American soil.
Steel, aluminum and imported cars are not affected either, but were already subject to a customs rate of 25%.
Canada and Mexico, under a different regime, are already paying a new price for Trump’s trade war.
The price will be higher from April 9 for countries considered particularly hostile to free trade, namely those who have significant commercial surpluses with the United States.
Trump announced total rates of 54% for China, 20% for the European Union (EU), 46% for Vietname and +24% for Japan, in a list that includes about 80 countries and territories.
The new Trump government fares should accelerate inflation and slow down economic growth, and the Fed Focus (Fed) focus will be to keep temporary price increases, Fed President Jerome Powell said on Friday.
Powell stated in a written comment that tariffs and their impacts on economics and inflation are “significantly greater than expected.”
The official also said that import taxes are “highly likely” to lead to “at least one temporary increase in inflation”, but added that “it is also possible that the effects are more persistent.”
“Our obligation is […] Ensuring that a unique price increase does not become a continuous inflation problem, “Powell said in comments made in Arlington, Virginia.
Powell’s focus on inflation suggests that the Fed could maintain the interest rate unchanged by about 4.3% in the coming months.
Just before this speech, Donald Trump urged the Fed president to lower interest rates in a publication on the Truth Social platform.
“This would be the perfect time for Fed President Jerome Powell to cut interest rates,” the Republican president wrote, stating that inflation has fallen from his return to power.
But Powell also stated that it was “very early” to adjust monetary policy.
Economists predict that tariffs will weaken the economy, possibly threaten hiring and increase prices.
In this scenario, the Fed could cut rates to boost the economy, or could keep unchanged rates-or even increase them-to combat inflation.
