Federal Reserve Barr: Tariffs push up inflation and slow down the economy, the Federal Reserve may be in trouble

On May 9, Federal Reserve Barr said Trump's trade policies could push up inflation, lower economic growth and push up unemployment later this year, potentially leaving policymakers with a tricky decision about which issue to address. "The scale and scope of recent tariff increases is unprecedented, we don't know their final form, and it's too early to say how they will affect the economy," Barr said. But he said the risks were clear. "In my view, higher tariffs could lead to disruptions in global supply chains and create sustained upward pressure on inflation," he said. He also noted that companies need time to adjust their distribution networks. Some suppliers, especially small businesses, may not be able to adapt quickly enough and may go out of business, adding to the chaos in the supply chain. "I'm equally concerned that tariffs will lead to higher unemployment as the economy slows," Mr. Barr said. "So if we see inflation and higher unemployment at the same time, the Fed could be in trouble."