Federal Reserve Chairman Jerome Powell dropped a stark warning Friday, April 4, 2025, telling a packed room at the Society for Advancing Business Editing and Writing conference that President Donald Trump’s massive new tariffs are set to jack up inflation and slow U.S. economic growth. By evening, the message was loud and clear—Powell’s not rushing to cut interest rates, despite Trump’s demands.
Powell didn’t mince words in Virginia. “Uncertainty remains elevated,” he said, pointing straight at Trump’s “Liberation Day” tariffs unveiled Tuesday—25% on auto imports, 34% reciprocal duties stacking onto 20% on China since March, and 25% on steel, aluminum, and Venezuelan oil buyers. “These tariff increases are significantly larger than expected,” Powell told the crowd, according to The Guardian’s live coverage. “The economic effects will likely include higher inflation and slower growth.” It’s a double whammy—prices climbing while the economy stumbles—that’s got the Fed on edge, holding its benchmark rate steady at 4.25% to 4.5% since January, after a full point cut in 2024.
Trump’s not backing down. Hours after Powell spoke, he fired off on Truth Social: “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates… CUT INTEREST RATES, JEROME!” He’s banking on lower rates to juice the economy as his tariffs—now hitting Canada, Mexico, and China hard—roll out. It’s classic Trump—pushing growth over stability—but Powell’s not biting. “We’re going to need to wait and see how this plays out,” he said Friday, stressing the Fed’s stuck in a fog of “highly uncertain outlook” thanks to trade chaos, immigration crackdowns, and federal layoffs from Trump’s Department of Government Efficiency (DOGE).
Trump’s tariff spree started Tuesday, April 2, with that Rose Garden speech—25% on autos effective today, 34% reciprocal tariffs to match what others charge U.S. goods, and a 25% levy on countries like China buying Venezuelan oil. It’s piled onto March’s 20% on Chinese imports and February’s 25% on steel and aluminum, no exceptions this time. China hit back with 35% on all U.S. goods starting April 10—soybeans, oil, tech—escalating a trade war that’s already shaved $5 trillion off U.S. stocks since February. Canada’s got $20 billion in duties on U.S. steel and gear; Mexico’s prepping its own Sunday; the EU’s eyeing $28 billion by mid-April.
Powell’s team sees trouble. March 19 projections pegged 2025 growth at 1.7%—down from 2.1%—and inflation at 2.7%, up from 2.5%. Now, with tariffs ballooning, he’s hinting those numbers might worsen. “Downside risks have risen,” he said Friday, noting consumer surveys—like the University of Michigan’s—show people expect prices to keep climbing, a self-fulfilling prophecy if they buy now and firms hike costs.
Your wallet’s feeling this. That 25% auto tariff? A $3,000 bump on cars from Canada and Mexico—2.5 million and 1.8 million yearly—says J.P. Morgan Research. Gas is up too—Canada’s 70% of U.S. crude imports faces a 10% energy duty, pushing pump prices 10–20 cents a gallon. China’s 35% retaliation? U.S. soybeans—$22 billion to China in 2023—get pricier there, hitting farmers already reeling from earlier 15% duties. Tech’s not safe—iPhones and laptops from China could rise 10–15%, think $1,500 instead of $1,300.
Groceries sting more—Mexico’s 60% of U.S. veggies and 50% of fruit now cost 25% extra. Avocados might hit $2 each, tomatoes too. Steel and aluminum duties mean pricier appliances—a fridge could jump $100, says the ITC. Housing’s tougher—Canada’s 70% of U.S. lumber faces tariffs, adding thousands to new homes, warns the NAHB. “It’s a one-two punch,” said analyst Joe Brusuelas to NBC News—higher costs, slower growth.
Powell’s stuck. Inflation’s at 2.8%—above the Fed’s 2% goal—and tariffs might push it to 3% or more, per Fed minutes from January 9. Growth’s slowing—1.7% isn’t recession, but it’s dicey with unemployment at 4.1%. Cut rates, and inflation could spike; hold or hike, and growth tanks—stagflation’s the “nightmare,” ex-Fed vice chair Donald Kohn told The New York Times. “We’re not in a hurry,” Powell said Friday, echoing his March 7 caution: “The tails are fatter than you think.” Two cuts are still penciled in for 2025, but observers are skeptical: “Higher inflation, slower growth—Fed’s hands are tied.”
Trump’s pressuring hard—he’s bashed Powell since 2018, re-upped last week at Davos. “I know rates better,” he’s claimed, but Powell’s not budging—won’t resign, won’t bend. “We’ll adjust when we see the data,” he said Friday, dodging Trump’s “perfect time” plea.
Powell’s holding at 4.25%–4.5%—next meeting’s May 6–7, but no rush, he says. Trump’s eyeing 60% on China and China might ban more minerals. Households brace—$2,500 yearly hits from U.S. tariffs, more if China’s bite sticks. “Downside risks are real".