President Trump's latest round of sweeping tariff hikes, announced July 31, 2025, come at a fragile moment for the United States economy. Inflationary pressures, combined with a lower than expected jobs number, leaves a lot for the Fed to juggle. Though Chairman Jerome Powell has signaled that the central bank is "looking through" tariffs for now, understanding everything that might affect these numbers is critical.

We used our agentic AI tool—Alfa™—to read thousands upon thousands of articles, statements and price data to create a thorough report on tariffs and the economy. Here’s the report Alfa™ created, or, the Alfa™ Angle.

Trump's tariff policies and economic impact

• Trump's tariffs are expected to dent economic growth and reignite inflation according to Federal Reserve Chair Powell, with the administration implementing hefty tariffs across the globe. The President announced historic US tariffs on July 31, 2025, and has been pressuring the Fed to cut interest rates, arguing his tariff policy will not push up inflation.
• The Federal Reserve has maintained its benchmark interest rate steady at 4.25% to 4.5% for five consecutive meetings amid inflation concerns. Inflation remains above the Fed's 2% target, with the Consumer Price Index rising to an annualized rate of 2.7% in June, up from 2.4% in May, while core inflation increased to 2.9% from 2.8%.
• Two Fed governors, Christopher Waller and Michelle Bowman, both Trump appointees, dissented from the consensus vote on July 30, 2025, preferring a quarter-point rate cut instead of holding steady. This marks the first time in three decades that two Fed governors have voted against consensus. Some economists, including the dissenters, believe Trump's tariffs are inflationary but only as a one-time increase in price levels.
• Chair Powell stated there is a "reasonable case" that tariff impact on prices could be short-lived, but reaffirmed that persistent inflation remains a possibility. Powell indicated the Fed is "looking through" tariffs while determining monetary policy, noting there is no pre-set path for interest rates. Markets are discounting only a 5% chance of a rate cut at the July FOMC meeting due to tariff-related inflation concerns.
• U.S. stock futures fell after President Trump threatened to impose new 30% tariffs on imports from Mexico and the European Union, while the dollar index rose to a 1-week high. The Bank of Canada has remained on hold since March due to uncertainty over U.S. tariff threats, and Malaysia reduced its overnight policy rate by 25 basis points to 2.75% in response to Trump's increased tariff threat of 25%.

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