US sweeping tariffs on aluminium and steel could hit own economy: Says Fed Chairman

Trump’s decision to impose additional tariffs on imported aluminium and steel could bring in a negative impact on United States economy, said Federal Reserve Chairman Jerome Powell on Thursday, July 12.

To quote Powell, "If it works out other ways, so that we wind up having high tariffs on a lot of products and a lot of traded goods and services ... and that they become sustained for a long period of time ... that could be a negative for our economy."

Besides, US businesses had also been expressing concerns over the Trump administration’s decision to impose tariffs, added the Federal Chief.

He said, "I think if you're picking up a newspaper today you're hearing that from a lot of businesses.” "It's very difficult to predict how it turns out."

Ever since the US imposed high tariffs on imported steel and aluminium products as well as Chinese goods, strong oppositions from the domestic business communities and retaliatory measures from the US trading partners had been coming to its way.

American business’ plans for capital investment had been scaled back or postponed as a result of uncertainty over trade policy, while US farmers were concerned about the consequences of higher tariffs on their exports, according to the minutes of the Fed’s June policy meeting released last week.

For the second time in June 2018, the Fed raised its target range for the benchmark federal funds rate and penciled in two more rate hikes in the second half of the year.

The central bank is also expected to increase rates in September and then hike in December.

However, Powell signalled the central bank could slow the pace of rate hikes or even lower interest rates, in case the US economy weakened.