economy
February 22, 2026
Trump’s trade war risks undermining his hopes of hefty US interest rate cuts
Upping tariffs may have lifted the president’s mood but it is a headache for the Federal Reserve and its next chair
TL;DR
- Donald Trump has announced new global tariffs of 10%, later increased to 15%, after the Supreme Court rejected his previous sweeping tariffs.
- The tariffs are estimated to have generated around $110 billion, but increase prices for American importers and could impact inflation.
- This situation presents a challenge for the US Federal Reserve and its incoming chair, Kevin Warsh, as the Fed appears divided on whether to raise or cut interest rates.
- Trump desires substantial interest rate cuts, but rising inflation and policy uncertainty, exacerbated by the trade war, could make this difficult.
- Economic experts question whether deregulation and a 90s-style approach can replicate past bullish conditions, citing different global inflation backdrops and damaged US supply potential.
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