Consumer borrowing costs might remain elevated due to President Donald Trump’s new tariffs since several experts state these duties will delay Federal Reserve interest rate cuts. The introduced tariffs scheduled for Tuesday activate a 25% tax on Canadian and Mexican imports coupled with a 10% tax on items from China. The temporary agreement postponing Mexico tariffs for one month will not prevent the measures from driving up prices and inflation rates.
The economic projections indicate that U.S. inflation will increase by 0.5 to 1 percentage points during the next four years due to the trade policies yet this development will disrupt the Federal Reserve’s price stability operation. The Federal Reserve System faces potential challenges to reduce interest rates during this year because inflation exceeds their targets which will affect borrowing expenses including those for credit cards. Paul Ashworth from Capital Economics declared that Federal Reserve interest rate cuts have lost their opportunity to return.
J.P. Morgan forecasts that through 2026 the policies will minimize economic expansion thereby decreasing U.S. GDP by a minimum of 0.5 percent and up to 1 percent. Several analysts like Stephen Brown suggest economic pressure from tariffs will push the Federal Reserve to lower interest rates despite concerns from some commentators about such rate changes. For now, uncertainty looms as policymakers and consumers brace for the impact. 
