Fed Says Tariffs Could Ease Inflation By Curbing Demand and Employment

Group 1 - The Federal Reserve Bank of San Francisco's research indicates that historically, high tariffs have led to lower inflation, challenging conventional economic theories [2][4]. - The average U.S. tariff rate is projected to increase by 15% in 2025, marking the largest rise in the modern era, which raises concerns about its impact on unemployment and inflation [3]. - The researchers propose that tariff shocks may create economic uncertainty, which depresses consumer and investor confidence, ultimately putting downward pressure on inflation [5]. Group 2 - Middle market companies are reportedly entering "defensive mode" due to the pressures from tariffs and delayed economic data, leading to high-stakes decision-making [7]. - Nearly 50% of product leaders in goods-producing companies have indicated that tariffs are negatively affecting their financial performance, highlighting the rapid shift of trade policy from a theoretical risk to a tangible operational issue [8]. - The cancellation of the advance estimate of third-quarter GDP and delayed retail sales reports have left firms without reliable indicators of demand or economic momentum, exacerbating the uncertainty in the market [9].