Fed’s Kugler Warns US Tariffs Could Stifle Growth as Trade Tensions Ease

Federal Reserve Governor Adriana Kugler cautioned that elevated US tariffs may act as a supply shock, driving up prices and dampening economic activity. Speaking in Dublin, she highlighted the multifaceted macroeconomic impacts of trade barriers just as Washington and Beijing agreed to a 90-day tariff reduction framework.

The temporary détente will see US duties on Chinese goods drop from 145% to 30%, with China’s retaliatory tariffs falling from 125% to 10%. Kugler noted the fluid nature of trade policy, remarking on the morning’s developments as evidence of continued volatility in global trade relations.

While acknowledging these diplomatic efforts, the Fed governor maintained her warning about persistent inflation risks, suggesting monetary policy should remain restrictive. The comments come amid heightened scrutiny of how trade flows and protectionist measures might influence the Fed’s policy trajectory.