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Apr 16, 2025
Who's Got Next?
Well well well - it's going to be Jerome Powell.
Trump’s tariffs are ‘highly likely’ to push prices up, Fed chief warns
The top official at the Federal Reserve, Jerome H. Powell, ratcheted up a warning about the inflationary effects of President Donald Trump’s trade policies.
President Donald Trump’s tariffs are “highly likely” to spur a temporary rise in inflation, Federal Reserve Board Chair Jerome H. Powell said Wednesday, cautioning that those effects could end up being longer-lasting.
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In remarks before the Economic Club of Chicago, Powell said more persistent risks to inflation — and the Fed’s ability to avoid them — depend on how much tariffs end up affecting the economy and how long it takes trade policy to pass through to prices. Powell said many of the administration’s policies — on trade, immigration, fiscal matters and regulation — are still evolving. But higher inflation and slower growth are probably in store, he said.
“The level of the tariff increases announced so far is significantly larger than anticipated,” Powell said. “The same is likely to be true of the economic effects.”
Powell also said that as the Fed sets interest rates, it could end up in a place where its two mandates — stable prices and maximum employment — are “in tension.”
Typically, the Federal Reserve raises interest rates to combat inflation by making it more expensive to get all types of loans. The Federal Reserve lowers interest rates if it fears the economy is slowing too much and needs a boost. That could prove difficult if inflation is rising in the midst of a broader downturn.
Prices aren’t rising significantly so far, and there aren’t widespread signs of a broader downturn. Small-scale job losses, or the anticipation that prices could go up soon, would not be enough to push the Fed to act.
Yet Powell’s warning comes as the economy and the Fed enter yet another uncertain chapter. After spiking to 40-year highs, inflation has been slowly easing toward a more normal 2 percent. Officials had been optimistic they were inching closer to the coveted “soft landing,” in which inflation returns to normal, the job market stays strong, and the economy keeps growing. But that path risks being thwarted by Trump’s trade war and looming uncertainty for businesses and financial markets alike.
At the same time, the financial markets have been in turmoil. By midday Wednesday, the Nasdaq was down more than 2 percent, and the S&P 500 had dropped more than 1 percent, extending losses of 14 percent for the year for the Nasdaq and 9 percent for the S&P. Plus, investors are fleeing Treasurys and the dollar, assets usually considered safer when volatility hits markets.
Fed officials routinely say their outlook depends on how Trump’s policies unfurl. Part of the difficulty also stems from policies that change in a matter of days. Last week, the White House paused many of the steep import taxes on most countries for 90 days, while further hoisting tariffs for China. It left in place a baseline 10 percent tariff on all imports from most countries and continued tariffs on imports of steel, aluminum and autos.
The shift prompted many forecasters to pare back their expectations for a recession. But that possibility is still on the table.
Earlier this week, Fed Governor Christopher Waller described new tariff policies as “one of the biggest shocks to affect the U.S. economy in many decades.” There’s plenty of uncertainty based on how large the tariffs are, for example. But Waller said it’s possible the effects on prices, while steep, won’t be permanent, so long as expectations around longer-term prices stay grounded. Still, aggressive tariff policy could slow growth to “a crawl” and push unemployment up, he said.
Fed officials ultimately having to parse short-term shifts — like a temporary rise in prices — from more lasting effects, like inflation or a broader slowdown. The distinction matters because officials set interest rate policy with the long-term health of the economy in mind, rather than reacting to blips or individual pieces of data. And they have been wrong before: when inflation started rising on the heels of the pandemic, central bankers thought those increases would be temporary. By the time they rushed to raise interest rates, high prices were already pulsing through American life.
“I can hear the howls already that this must be a mistake given what happened in 2021 and 2022,” Waller said in his Monday speech. “But just because it didn’t work out once does not mean you should never think that way again.”
Under other scenarios, Fed leaders would also be hesitant to raise interest rates if the economy is slowing too much. That isn’t happening right now. The job market has stayed strong through upheaval in the federal government, and the unemployment rate is at a low 4.2 percent. The Fed’s preferred inflation gauge was at 2.5 percent in February.
But there are other concerning markers on the Fed’s dashboard, too. Retail sales jumped in March, with economists attributing the rise to consumers panic buying before tariffs take hold. Industrial production fell for the first decline in four months in March. Stocks have also flashed red since Trump kicked off the trade war.
Trump has publicly pressured the Fed to lower interest rates to stimulate the economy. The Fed closely guards its independence from politics and takes pains not to get involved in fiscal policy. But Trump has historically ignored those norms, recently telling Powell to “stop playing politics!” in a post on X.
“He is always ‘late,’ but he could now change his image, and quickly,” Trump wrote earlier this month.
Trump's been leading up to it for a while, and now - probably - he'll test the boundaries again by insisting on firing the Fed Chief.
Which will give us the next big Oh Fuck moment, which will push the previous Oh Fuck moments out of the news cycle.
The top official at the Federal Reserve, Jerome H. Powell, ratcheted up a warning about the inflationary effects of President Donald Trump’s trade policies.
President Donald Trump’s tariffs are “highly likely” to spur a temporary rise in inflation, Federal Reserve Board Chair Jerome H. Powell said Wednesday, cautioning that those effects could end up being longer-lasting.
Get a curated selection of 10 of our best stories in your inbox every weekend.
In remarks before the Economic Club of Chicago, Powell said more persistent risks to inflation — and the Fed’s ability to avoid them — depend on how much tariffs end up affecting the economy and how long it takes trade policy to pass through to prices. Powell said many of the administration’s policies — on trade, immigration, fiscal matters and regulation — are still evolving. But higher inflation and slower growth are probably in store, he said.
“The level of the tariff increases announced so far is significantly larger than anticipated,” Powell said. “The same is likely to be true of the economic effects.”
Powell also said that as the Fed sets interest rates, it could end up in a place where its two mandates — stable prices and maximum employment — are “in tension.”
Typically, the Federal Reserve raises interest rates to combat inflation by making it more expensive to get all types of loans. The Federal Reserve lowers interest rates if it fears the economy is slowing too much and needs a boost. That could prove difficult if inflation is rising in the midst of a broader downturn.
Prices aren’t rising significantly so far, and there aren’t widespread signs of a broader downturn. Small-scale job losses, or the anticipation that prices could go up soon, would not be enough to push the Fed to act.
Yet Powell’s warning comes as the economy and the Fed enter yet another uncertain chapter. After spiking to 40-year highs, inflation has been slowly easing toward a more normal 2 percent. Officials had been optimistic they were inching closer to the coveted “soft landing,” in which inflation returns to normal, the job market stays strong, and the economy keeps growing. But that path risks being thwarted by Trump’s trade war and looming uncertainty for businesses and financial markets alike.
At the same time, the financial markets have been in turmoil. By midday Wednesday, the Nasdaq was down more than 2 percent, and the S&P 500 had dropped more than 1 percent, extending losses of 14 percent for the year for the Nasdaq and 9 percent for the S&P. Plus, investors are fleeing Treasurys and the dollar, assets usually considered safer when volatility hits markets.
Fed officials routinely say their outlook depends on how Trump’s policies unfurl. Part of the difficulty also stems from policies that change in a matter of days. Last week, the White House paused many of the steep import taxes on most countries for 90 days, while further hoisting tariffs for China. It left in place a baseline 10 percent tariff on all imports from most countries and continued tariffs on imports of steel, aluminum and autos.
The shift prompted many forecasters to pare back their expectations for a recession. But that possibility is still on the table.
Earlier this week, Fed Governor Christopher Waller described new tariff policies as “one of the biggest shocks to affect the U.S. economy in many decades.” There’s plenty of uncertainty based on how large the tariffs are, for example. But Waller said it’s possible the effects on prices, while steep, won’t be permanent, so long as expectations around longer-term prices stay grounded. Still, aggressive tariff policy could slow growth to “a crawl” and push unemployment up, he said.
Fed officials ultimately having to parse short-term shifts — like a temporary rise in prices — from more lasting effects, like inflation or a broader slowdown. The distinction matters because officials set interest rate policy with the long-term health of the economy in mind, rather than reacting to blips or individual pieces of data. And they have been wrong before: when inflation started rising on the heels of the pandemic, central bankers thought those increases would be temporary. By the time they rushed to raise interest rates, high prices were already pulsing through American life.
“I can hear the howls already that this must be a mistake given what happened in 2021 and 2022,” Waller said in his Monday speech. “But just because it didn’t work out once does not mean you should never think that way again.”
Under other scenarios, Fed leaders would also be hesitant to raise interest rates if the economy is slowing too much. That isn’t happening right now. The job market has stayed strong through upheaval in the federal government, and the unemployment rate is at a low 4.2 percent. The Fed’s preferred inflation gauge was at 2.5 percent in February.
But there are other concerning markers on the Fed’s dashboard, too. Retail sales jumped in March, with economists attributing the rise to consumers panic buying before tariffs take hold. Industrial production fell for the first decline in four months in March. Stocks have also flashed red since Trump kicked off the trade war.
Trump has publicly pressured the Fed to lower interest rates to stimulate the economy. The Fed closely guards its independence from politics and takes pains not to get involved in fiscal policy. But Trump has historically ignored those norms, recently telling Powell to “stop playing politics!” in a post on X.
“He is always ‘late,’ but he could now change his image, and quickly,” Trump wrote earlier this month.
The Point
When Howard Lutnick railed about the American dream not being about buying cheap goods from China, that wasn't criticism or a call to greatness - that was him telling us what Republicans intend to do to American workers.
With the Trump administration implementing a blizzard of anti-worker initiatives on a near-daily basis, it’s difficult to imagine that these early assaults could be only the tip of the iceberg. But President Trump and billionaire Elon Musk may well have far worse plans to attack U.S. workers and labor relations.
One little-seen proposal from outside the White House has the potential to upend our entire system of labor relations. It comes from the “Coalition for a Democratic Workplace” (CDW)—an anti-union trade association of several hundred employers and employer associations, including the U.S. Chamber of Commerce and National Association of Manufacturers. The coalition sent a letter to Attorney General Pam Bondi asking her to repudiate and invalidate more than a dozen major decisions issued by the National Labor Relations Board (NLRB) during the Biden administration, and to instruct all NLRB appointees and employees that they cannot treat these properly issued decisions as governing law.
The decisions in question address important issues like which workers have the right to form and join a union and what remedies are available to workers who are illegally fired in retaliation for exercising their rights in the workplace. Like all decisions issued by the NLRB—a multi-member body that acts as a court to adjudicate labor disputes—they were issued after full briefing and consideration of the issues and are treated as precedent governing subsequent cases.
Ordinarily, the way employers try to get the NLRB to change a decision they disagree with is to challenge the decision on appeal. Many of the decisions identified in the memo have been challenged, and those court proceedings are in progress. Employers also have the ability to argue to the Board in future cases that it should revisit its own precedent. The NLRB would then consider the issue and arguments and decide whether to change its earlier decision. This process comports with the Administrative Procedure Act (APA), which requires agencies to engage in “reasoned decision-making” when deciding cases. In other words, the agency has to explain itself when it changes course—it can’t just declare a new rule.
In what would be a radical—and clearly unlawful—departure from these well-established avenues for appeal, the employer coalition has asked Pam Bondi—who has no background or experience in labor relations—to unilaterally invalidate more than a dozen NLRB decisions with the stroke of a pen. While there is nothing in the National Labor Relations Act or any other federal law giving the attorney general any authority to overturn a NLRB decision, CDW cites President Trump’s executive order on independent agencies as authority for this action. That executive order purports to give the attorney general the authority to impose their own interpretation of any law onto independent agencies like the NLRB.
This dangerous suggestion is clearly unlawful in numerous respects. First, it completely undermines Congress’s directive that the NLRB functions as an independent agency, with labor disputes adjudicated by a panel of experts insulated from political influence. Second, if the agency did comply with this directive and revert to the law as it existed prior to the targeted decisions, any decisions following this earlier law would clearly run afoul of the Administrative Procedure Act, as the agency’s changed course would have no statutory explanation at all—the exact opposite of the “reasoned decision-making” that the APA requires.
Perhaps even more alarming is the damage this would do to our nation’s labor relations in the long term. One of the oft-cited criticisms of the NLRB is that the Board changes course and reverses itself too often, causing instability in the law. While reasonable minds can differ about how often is “too often” to revisit precedent, management and labor alike should be in agreement that abandoning the very concept of precedent altogether would be a huge step in the wrong direction.
Let’s play it out. If this scheme is successful and somehow withstands judicial review (a big if), the Trump administration could immediately undo all significant legal precedents issued by the NLRB during the Biden administration. Indeed, if an attorney general can unilaterally impose their own reading of the law on the agency without restriction, there is nothing to stop Attorney General Bondi from going further and directing the agency to abandon far longer-standing precedents with which she disagrees. Literally any aspect of labor law that has not been explicitly endorsed by the federal courts would be ripe for instantaneous revision at any time. And nothing would stop a future administration from doing the exact same thing—instantaneously revising all of labor law in a pro-worker direction and overturning any decision that favored management. Labor law would become so unpredictable and changeable as to be effectively useless. Workers and employers would bring cases before the NLRB at their peril—under the CDW’s view of things, any favorable ruling could be immediately erased by the attorney general.
Unfortunately, the lessons of history demonstrate all too well the danger to workers, employers, and the economy that can result—such as labor unrest and economic disruption—when there is no neutral entity that people can turn to in resolving disputes.
One would hope that is not the goal of any of the businesses and trade associations that comprise the CDW. Any reasonable employer should take prompt action to denounce this radical agenda and ensure it dies a quick and well-deserved death.
Wanna Know What's Crazy?
Ford offering a Shelby version pickup truck. That's fuckin' crazy.
Carroll Shelby would shove that thing up somebody's ass.
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