Fed’s Powell warns high inflation and slower growth could be here to stay, as Trump tells him to cut interest rates
Meanwhile, Jerome Powell has been speaking in Virginia.
Donald Trump’s new tariffs are “larger than expected” and the economic fallout including higher inflation and slower growth likely will be as well, the Federal Reserve chair said on Friday in remarks that pointed to the potentially difficult set of decisions ahead for the central bank.
Powell said in prepared remarks for a business journalists’ conference:
We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation. While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.
Powell said it was not the Fed’s role to comment on the Trump administration’s policies but rather to react to how they might affect an economy that he and his colleagues regarded just a few weeks ago as being in a “sweet spot” of falling inflation and low unemployment.
As the new policies and their likely economic effects become clearer, we will have a better sense of their implications for the economy and for monetary policy. While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.
Key events
udge orders Trump administration to return deported Maryland man to US from El Salvador
A US judge ruled on Friday that the Trump administration must return to the United States a Maryland man who was wrongly deported to El Salvador last month as part of a US agreement with that country’s government to detain alleged gang members.
Reuters reports that the US government has acknowledged that the deportation of Kilmar Abrego Garcia, a Salvadoran migrant whose lawyers say he was in the country legally, was made in error. But it says it had no legal authority to bring him back to the US.
I’ll bring you more on this as we get it.
Lost in the weeds of Donald Trump’s trade war, Trump told reporters on Air Force One that Israeli prime minister Benjamin Netanyahu could visit the White House as early as next week, NBC News reports. He said on Friday:
We’ll speak about Israel, and we’ll speak about what’s going on. That’s another thing we’d like to get solved.
Trump’s comments come as Israel restarted its ground operations in the northern Gaza Strip, killing at least 25 people in airstrikes on the southern city of Khan Younis in what it claims is a renewed military campaign aimed at pressuring Hamas into releasing Israeli hostages.
Netanyahu on Wednesday said the army was “seizing territory” and “dividing up” Gaza, renewing fears of permanent displacement for the strip’s 2.3 million residents and inflaming worries that Israel intends to permanently take control of the territory.
Sam Levine
More than 500 law firms signed onto an amicus brief on Friday in support of a challenge to Donald Trump’s efforts to target the legal profession.
“Although we do not take this step lightly, our abiding commitment to preserving the integrity of the American legal system leaves us no choice but to join together to oppose” Donald Trump’s 6 March executive order targeting Perkins Coie, the brief says. It was authored by Donald Verrilli, Jr., who served the solicitor general in Barack Obama’s administration.
“In recent weeks, the President has issued not one but five executive orders imposing punitive sanctions on leading law firms in undisguised retaliation for representations that the firm, or its former partners, have undertaken, and more may be in the offing.Those Orders pose a grave threat to our system of constitutional governance and to the rule of law itself,” it says.
The brief amounts to the largest statement from the legal community so far in pushing back against Trump’s efforts to retaliate against lawyers. Some major firms, including Covington and Burling – the first firm Trump punished with an executive order – and Arnold & Porter – signed on to the brief.
But the brief was notable not just for how many firms signed, but who didn’t. Many of the nation’s most prominent and profitable law firms did not join.
Among the major firms missing were: Kirkland & Ellis, Cravath, Swaine, and Moore, Davis Polk & Wardwell LLP, and Wachtell, Lipton, Rosen & Katz. Several of those firms were reportedly hesitant to stick their neck out and sign without support from others, according to the New York Times.
So far, Trump has targeted five firms with executive orders – Covington and Burling, Perkins Coie, Paul Weiss, Jenner & Block, and WilmerHale. Perkins Coie and Jenner & Block have sued and successfully gotten preliminary rulings halting most of the orders. Covington and Burling has not taken legal action on its own.
Paul Weiss settled with the president and agreed to perform pro bono work and review its hiring practices in an agreement that has been widely criticized for only emboldening the president to go after other firms.
Several other firms, Skadden, Willkie Farr & Gallagher, and Milbank LLP have all reached pre-emptive agreements with Trump to avoid orders.
Related: ‘They’re all bending’: Two more law firms reach deals with Trump to avoid executive orders
‘US tariffs are damaging, unjustified’, says EU trade commissioner
This is from Maroš Šefčovič, the EU’s trade commissioner, saying he’s held “frank” talks with US commerce secretary Howard Lutnick and US trade representative Jamieson Greer during which he reaffirmed to them that “US tariffs are damaging, unjustified”.
“The [EU-US] trade relationship needs a fresh approach. The EU’s committed to meaningful negotiations but also prepared to defend our interests,” Šefčovič posted on X.
A frank 2h exchange w Sec. @howardlutnick and Amb. @jamiesongreer. I was clear: US tariffs are damaging, unjustified.
The 🇪🇺🇺🇸 trade relationship needs a fresh approach. The EU’s committed to meaningful negotiations but also prepared to defend our interests.
We stay in touch. pic.twitter.com/gLRayKPchP
— Maroš Šefčovič🇪🇺 (@MarosSefcovic) April 4, 2025
It echoes comments from the head of the European Commission, Ursula von der Leyen, who on Thursday described the tariffs as “a major blow to the world economy” spelling “dire” consequences for millions of people. She said the EU was prepared to respond, but urged Trump to “move from confrontation to negotiation”.
She said the EU was “preparing for further countermeasures to protect our interests and our businesses if negotiations fail”.
Related: Macron suggests pause on US investment as EU leaders condemn Trump tariffs
Here’s Trump’s post on his Truth Social platform on the extension of the deadline for the sale of TikTok.
My Administration has been working very hard on a Deal to SAVE TIKTOK, and we have made tremendous progress. The Deal requires more work to ensure all necessary approvals are signed, which is why I am signing an Executive Order to keep TikTok up and running for an additional 75 days. We hope to continue working in Good Faith with China, who I understand are not very happy about our Reciprocal Tariffs (Necessary for Fair and Balanced Trade between China and the U.S.A.!). This proves that Tariffs are the most powerful Economic tool, and very important to our National Security! We do not want TikTok to “go dark.” We look forward to working with TikTok and China to close the Deal. Thank you for your attention to this matter!
Trump extends deadline for TikTok sale to non-Chinese buyer by 75 days
Donald Trump extended the deadline for the sale of ByteDance’s US assets of TikTok by 75 days, saying “tremendous progress” had been made but more work was needed to secure approvals, Reuters reports.
“The deal requires more work to ensure all necessary approvals are signed,” Trump said, explaining why he was extending the deadline he set in January that was supposed to expire Saturday. “We hope to continue working in good faith with China, who I understand is not very happy about our reciprocal tariffs.”
China now faces a 54% tariff on goods imported into the US. Trump has said he would be willing to reduce tariffs on China to get a deal done with ByteDance.
Trump has said his administration was in touch with four different groups about a prospective TikTok deal. He has not identified them. “We do not want TikTok to ‘go dark’,” he said.
Jason Rodrigues
The last time US tariffs were this high was after president Herbert Hoover signed into law the controversial Smoot-Hawley Tariff bill in 1930, which saw tariffs on many imported goods averaging nearly 40%.
Just as now, there was global indignation at what was seen as unreasonable protectionism by the US, with nations such as France threatening firm retaliation if it did not back down.
In a Manchester Guardian report below, former French prime minister Édouard Herriot was reported to have urged European governments to work together against the tariffs, claiming it was a “matter of life or death”. European economies at the time were decimated following the first world war.
As politicians sought to negotiate with the US, European businesses took a more direct course of action by boycotting US produce.
In the UK, department stores even placed placards in their windows advertising an ‘Empire loaf’, which was made with 85% Canadian flour.
The impact of Hoover’s tariffs were, as predicted by hundreds of economists, highly damaging to the US, with estimates of imported goods, many of which were needed by US industry and commerce, plummeting by nearly half.
Hoover’s protectionism might have appealed to staunch Republicans, but it ruined his standing among his party’s progressives.
Many Republicans who had campaigned for Hoover in the 1928 presidential election ended up endorsing Democrat Franklin D Roosevelt for president in the next election.
British prime minister Keir Starmer spoke to his Australian and Italian counterparts, Anthony Albanese and Giorgia Meloni, about how they should respond to Trump’s tariffs on Friday, saying they agreed an “all-out trade war would be extremely damaging”.
Reuters reports that in separate calls, Starmer said it had been “clear for a long time that like-minded countries must maintain strong relationships and dialogue to ensure our mutual security and maintain economic stability”, a spokesperson from his office said in a statement.
“They all agreed that an all-out trade war would be extremely damaging and is in nobody’s interests, while agreeing to keep in close contact in the coming days.”
Trump administration violated court order by pausing Fema grants, judge says
A federal judge ruled on Friday that Donald Trump’s administration violated a court order by halting the disbursement of hundreds of millions of dollars in Federal Emergency Management Agency (Fema) grants to states, and ordered Fema to disperse the funds.
US district judge John McConnell in Providence, Rhode Island, sided with Democratic state attorneys general in finding that the funding pause violated his injunction blocking the administration’s earlier sweeping pause of federal grants, loans and other financial aid.
Those attorneys general from 22 states and the District of Columbia said that Fema had been halting disbursements since early February in order to conduct a “manual review” of grants without clearly explaining when the process would end.
They said the funding freeze at Fema appeared to be tied to an executive order the Republican president signed on his first day in office on 20 January as part of his immigration crackdown that targeted so-called “sanctuary jurisdictions”.
The homeland security secretary, Kristi Noem, whose department oversees Fema, subsequently issued a memo directing restrictions on grant funding to sanctuary jurisdictions, which have laws that prevent state and local law enforcement from assisting federal civil immigration officers, according to court papers.
Related: Trump orders review of Fema after saying disaster agency ‘is not good’
Trump personally chose tariff formula – report
Donald Trump personally chose the formula used to determine country-specific tariffs, according to the Washington Post.
Despite being presented with a variety of options to determine tariff rates for specific countries, the president ultimately chose the simple formula based on the trade deficit with each country and the total value of its US exports, the outlet reports.
Those who presented various options included officials from the White House National Economic Council, the Commerce Department, the Council of Economic Advisers and the Office of the United States Trade Representative, people familiar with the matter told the Post.
They added that “numerous more sophisticated approaches were developed than the one Trump selected”.
Since Trump’s reveal of his tariffs, which have sent shockwaves across the global markets, economists have been stunned by what they call a formula created by “willing sycophants”.
“This is not serious trade policy or grand strategy,” Adam Tooze, an economic historian at Columbia University, told the Guardian.
“The boss hates trade deficits and his team of willing sycophants came up with a formula, however idiotic, that ticked the box,” he added.
Callum Jones
Donald Trump’s global tariffs assault is set to raise prices and slow down economic growth, the Federal Reserve chair, Jerome Powell has warned, defying the US president’s demands for an immediate interest rate cut.
While the US economy remains robust, Powell cautioned that there is high uncertainty over its direction. “Downside risks have risen,” he told an event in Arlington, Virginia, on Friday.
The Fed chair stressed that the tariffs unveiled by Trump this week were markedly more extensive than expected – and warned the impact would likely be larger as a result.
Trump promised to bring down prices while campaigning to win back the White House last year, and erroneously claimed on Wednesday they were “way down”, despite inflation holding firm.
For the full story, click here:
Maya Yang
Speaking at a business journalists’ conference on Friday, Federal Reserve chair Jerome Powell said that “it’s not clear at this time what the appropriate path for monetary policy will be.”
Nevertheless, Powell did also say:
“Inflation’s going to be moving up and growth is going to be slowing…but…we’re going to need to wait and see how this plays out before we can start to make those adjustments.”
Fed’s Powell warns high inflation and slower growth could be here to stay, as Trump tells him to cut interest rates
Meanwhile, Jerome Powell has been speaking in Virginia.
Donald Trump’s new tariffs are “larger than expected” and the economic fallout including higher inflation and slower growth likely will be as well, the Federal Reserve chair said on Friday in remarks that pointed to the potentially difficult set of decisions ahead for the central bank.
Powell said in prepared remarks for a business journalists’ conference:
We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation. While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.
Powell said it was not the Fed’s role to comment on the Trump administration’s policies but rather to react to how they might affect an economy that he and his colleagues regarded just a few weeks ago as being in a “sweet spot” of falling inflation and low unemployment.
As the new policies and their likely economic effects become clearer, we will have a better sense of their implications for the economy and for monetary policy. While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.
Trump calls on Fed’s Jerome Powell to cut interest rates
Donald Trump has called on Federal Reserve chairman Jerome Powell to cut interest rates, saying it was the “perfect time” to do so.
In a post on his Truth Social platform, the president wrote:
This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly.
CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!
Vietnam’s leader offers to reduce tariffs on US, Trump says
Donald Trump on Friday said he had a “productive” call with Vietnam’s leader To Lam during which Lam offered to reduce tariffs on US imports to his country.
Trump wrote on his Truth Social platform:
Just had a very productive call with To Lam, General Secretary of the Communist Party of Vietnam, who told me that Vietnam wants to cut their Tariffs down to ZERO if they are able to make an agreement with the US. I thanked him on behalf of our Country, and said I look forward to a meeting in the near future.
Developing countries in southeast Asia are among the trading partners facing the highest of Trump’s tariffs – Vietnam was smacked with a levy of 46%.
My colleagues reported on Thursday that one expert said Trump was likely to be targeting countries that received investment from China, regardless of the situation in that country. Chinese manufacturers have previously relocated to countries such as Vietnam and Cambodia not only due to lower operating costs, but also to avoid tariffs.
Related: Asian countries riven by war and disaster face some of steepest Trump tariffs
‘Oligarchy’: Trump exempts big oil donors from tariffs package
Dharna Noor
The sweeping package of tariffs unveiled by Donald Trump on Wednesday includes an exemption for the energy sector, which is a clear sign of the president’s fealty to his big oil donors over the American people, advocates say.
Trump’s new 10% universal tariffs – which are higher for many major economies – are wreaking havoc on the global economy and are expected to increase consumer prices in the US. But the levies will not apply to many fossil fuel products, including liquefied natural gas imports, crude oil from Canada, and materials needed for making petrochemicals. (In the instance of Canada, for example, this is despite the US placing a 25% tariff on Canadian steel, aluminum and vehicles).
Oil interests celebrated the carveout. Mike Sommers, head of the top US fossil fuel lobby group, the American Petroleum Institute, wrote in a social media post:
We welcome President Trump’s decision to exclude oil and natural gas from new tariffs, underscoring the complexity of integrated global energy markets and the importance of America’s role as a net energy exporter. We will continue working with the Trump administration on trade policies that support American energy dominance.
The exemption came after the fossil fuel industry poured $96m into Trump’s re-election campaign and affiliated political action committees, as he pledged to deregulate the sector and roll back environmental regulations. This was less than the $1bn Trump requested from the sector in an infamous meeting at his Mar-a-Lago club, but still constituted record levels of spending.
Stevie O’Hanlon, spokesperson for youth-led environmental justice group the Sunrise Movement, said on Thursday:
Oil and gas billionaires just bought themselves an exemption from Trump’s tariffs. While the rest of us have to deal with skyrocketing prices and rising temperatures, they’re sitting on their thrones and raking in billions. We need an end to this oligarchy now.
Nintendo postpones Switch 2 preorders in US after Trump tariffs
Nintendo has announced that preorders for its new Switch 2 gaming console will not begin on 9 April in the US as previously planned while the company assesses “the potential impact of tariffs”, CNN reports.
In a statement the Japanese company said:
Pre-orders for Nintendo Switch 2 in the US will not start April 9, 2025 in order to assess the potential impact of tariffs and evolving market conditions. Nintendo will update timing at a later date. The launch date of June 5, 2025 is unchanged.
Nintendo announced the Switch 2 on Tuesday, the day before Donald Trump launched his barrage of tariffs on foreign goods, which heavily target Asia, where many tech supply chains are based — including Nintendo’s.
Automakers shift gears after Trump tariffs
Automakers have already started to adapt to the 25% tariff imposed on car imports by Donald Trump, from pausing production to raising prices or halting certain models, AFP reports.
Bank of America estimates that some 7.3m vehicles, or 8% of global auto sales, will get hit by the tariff.
Ford CEO Jim Farley said in February that the tariffs will expose automakers to a “lot of cost and a lot of chaos”.
Similar tariffs on car parts will also gradually come into effect, AFP reported.
Volkswagen has already informed its US dealers that it will add an “import fee” to cars it ships into the country from Europe and Mexico, according to trade publication Automotive News.
Bank of America estimates that US vehicle prices would rise by about $10,000 if manufacturers fully pass on the cost of tariffs and maintain their profit margins, AFP noted.
Meanwhile, Stellantis, which also makes Chrysler, Dodge and RAM Truck vehicles, announced on Thursday it would pause production at some plants in Canada and Mexico.
Its Chrysler plant in the Canadian city of Windsor, which employs 4,000 people and sits across a river from US auto capital Detroit, will pause production from 7-21st April.
Nissan plans to stop selling in the US the QX50 SUV and QX55 crossover coupe SUV, which are both made in its Mexican factory in Aguascalientes.
