The additional tariffs, if implemented, put more pressure on the Fed to reduce interest rates to offset the potential impact of slowing global growth. Whether the Fed chooses to lower rates at its next meeting in September will depend on both economic data received in the intervening period and the Fed’s desire to maintain its independence from Trump’s political agenda.

The tariffs also would likely have a greater impact on the U.S. economy compared with the previous tariffs. This is because the size of the impacted imports is larger, and the composition of these imports is more consumer goods oriented. The U.S. consumer, though, is likely to be resilient due to the strong employment situation and robust savings. Recent revisions to the savings rate data have shown the current level to one of the highest in many years. That means U.S. consumers should have the ability to cope with higher prices brought on by the tariffs. That, in turn, will lessen the pressure on the Fed to ease monetary policy

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