Officials from the Federal Reserve stated on Wednesday that uncertainty over a potential “trade war” from Trump’s trade tariffs could affect economic policy. The nation’s central bank needs to take a “wait-and-see” approach regarding the potential impact of any new trade tariffs imposed by the Trump administration, states Raphael Bostic, who is the president of the Atlanta Federal Reserve Bank.
One of the most influential and powerful fed governors, Lael Brainard, stated that new tariffs could cause great uncertainty about the future of any potential fed decisions. Brainaird stated that although tariffs could pose a problem, it is too early to say what tariffs would do the U.S. economy.
Robert Kaplan, the president of the Dallas Federal Reserve Bank, stated that hurting the relationships with some of the United States most important trade partners, such as Canada and Mexico, would not be in the best interests of the country.
Donald Trump plans to formally impose tariffs on aluminum and steel manufacturers that export their products to the United States. Trump has stated the tariffs would apply to every country in the world. Trump’s plan is to impose a tariff, or tax, of 10 percent on imported aluminum and 25 percent on steel.
Some economists fear the tariffs could lead to a trade war between the U.S. and countries that export goods to the states. A trade war starts when another country imposes tariffs on goods imported to their countries from the United States.