Tariffs and growth under pressure

Economists warn new tariffs could raise prices and slow growth, while the White House says growth is rebounding.

Trump tariffs raise stagflation fears

Tariffs on Aug 7 increased the effective U.S. tariff rate to about 18 percent, the highest since 1934, according to Yale Budget Lab. Economists warn that costs could pass through to consumers, pushing up prices even as growth slows this year.

The White House argues inflation remains cool and growth is rebounding, dismissing stagflation talk as a buzzword. Data on job creation show revisions across manufacturing, retail, wholesale and construction, while economists say the policy mix could slow hiring and keep wage growth in check as prices rise.

The tariff move is a risk management gamble. It aims to protect domestic industries but could backfire by raising prices and squeezing supply chains. If inflation drifts up while growth stalls, the Fed faces a difficult balance between fighting inflation and supporting jobs.

Politically, the debate is noisy. The White House resists the stagflation label, while investors and workers watch for signals on policy. In the coming months, the true test will be how much pain households are asked to bear and whether the economy can adapt without tipping into a deeper slowdown.

Highlights

The trajectory of prices and jobs in the months ahead will show whether tariffs help policy goals or simply weigh on households.