US Fed Issues Export Warning, Highlights Rising Economic Risks Amid Trump’s Tariff War

 The US Federal Reserve kept interest rates steady for the fourth straight meeting on Wednesday but made notable changes to its policy language, signaling growing concern over the economic impact of former President Donald Trump’s aggressive trade policies.

While maintaining the benchmark interest rate at 4.25% to 4.5%, the Fed introduced new wording that acknowledged trade-related volatility for the first time in the current cycle. “Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace,” the statement noted. This marks the central bank’s first direct reference to export disruptions, a clear nod to the ongoing tariff conflict.

Growth Persists, But Tariff Threats Cloud the Outlook

The Fed has consistently described the US economy as growing at a “solid pace” since January 2024, a phrase that remained in Wednesday’s statement. However, the use of this language comes even after recent GDP figures revealed the first economic contraction in three years. In a more cautious tone, the Fed added that “uncertainty about the economic outlook has increased further” and warned of “rising risks of higher unemployment and higher inflation” — an indication of growing fears over stagflation, the simultaneous occurrence of slow growth and elevated inflation.

Speaking after the policy announcement, Fed Chair Jerome Powell directly linked the deteriorating sentiment among households and businesses to trade tensions. “Surveys have shown a sharp drop in confidence and rising uncertainty about the economic outlook, largely due to concerns over trade policy,” Powell said. He further cautioned, “It remains unclear how these developments might impact future consumer spending and business investment, particularly in the labor market.”