Federal Reserve announcements or policy changes

Trump Team Considers 2%-5% Monthly Tariff Hikes Under Emergency Powers Amid Inflation Concerns

Jan 13, 2025, 10:04 PM

Members of Donald Trump's incoming economic team are discussing a proposal to gradually increase tariffs month by month, with potential hikes ranging from 2% to 5%, under emergency powers. This approach is aimed at boosting negotiating leverage while helping to avoid a spike in inflation. The proposal has not yet been reviewed or approved by Trump. Stephen Miran, Trump's nominee to chair the Council of Economic Advisers, has advocated for higher tariffs, suggesting an average increase to 20%, and potentially up to 50%, to address economic challenges such as an overvalued dollar and trade deficits. UBS analyst Kapteyn has noted that tariffs are inflationary and that rolling tariffs could pose a problem for the Federal Reserve, which is still battling inflation. Discussions on this matter have involved Bessent and Hassett.