Loading article…
Trump announces 10‑12.5% tariffs on 60 countries as Powell’s 3.2% core PCE warning resurfaces, pushing markets to reassess inflation risks.
Jerome Powell’s warning that tariffs were inflating core prices – 3.2% year‑over‑year in March – has become more relevant after President Trump unveiled new duties on 60 trading partners ranging from 10% to 12.5% [2].
| At a glance | |
|---|---|
| Core PCE (ex‑food & energy) | 3.2% YoY (March) |
| New tariffs announced | 10‑12.5% on 60 countries |
| Major indexes | DJIA +0.51%, S&P 500 +0.02%, Nasdaq ‑0.18% (record highs) |
| Inflation outlook | Headline fell to 3.5% in June, core unchanged |
At his final FOMC meeting on April 29, Powell linked the 3.2% rise in core personal consumption expenditures (PCE) to tariff‑driven price pressure in the goods sector [2]. That comment was made while the Fed was already flagging President Trump’s trade measures as a key driver of “above‑average” inflation. The administration’s latest tariff package, announced in late July, re‑imposes duties on 60 trading partners after a temporary 10% tariff expired [2][3]. The duties range from 10% to 12.5% and are being applied under Section 301 of the Trade Act of 1974. By increasing the cost of unfinished imported goods, the tariffs are expected to raise production costs for U.S. manufacturers, which can be passed on to consumers and push inflation higher [2].
Despite the tariff news, U.S. equity markets have continued to climb, with the Dow Jones Industrial Average up 0.51% and the S&P 500 edging higher by 0.02% since early June [2][3]. The Nasdaq slipped 0.18%, reflecting mixed sentiment across growth‑oriented stocks. The divergence between soaring equity valuations and persistent inflation pressures underscores the “inflation quadruple whammy” that Fed policymakers now face: energy supply shocks from the Iran‑related Strait of Hormuz closure, lingering headline inflation (down to 3.5% in June), AI‑driven price spikes in hardware, and the newly announced tariffs [2][3].
The combination of these four inflation drivers complicates the Federal Open Market Committee’s decision‑making ahead of its July 29 meeting. While headline inflation has eased, core PCE remains stubbornly high, and the tariff shock could add further stickiness to goods‑sector prices. The Fed will need to weigh whether the recent tariff escalation warrants a tighter monetary stance or if other factors, such as the energy shock, dominate the inflation outlook.
Powell’s earlier warning that tariffs could sustain elevated core inflation now has a concrete policy trigger, forcing markets and policymakers to reassess the balance between growth and price stability as new trade barriers take effect.
Coverage is mostly measured — 261 of 269 reports stay neutral.
Every Monday — the token unlocks, Fed dates & catalysts set to move crypto and markets this week. So you’re never blindsided.
Free · 3-min read · one-click unsubscribe
AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 3 outlets · Jul 28, 2026 · How we report
Inflation is an economic term referring to an increase in the average price of goods and services, which results in a decrease in the purchasing power of a currency. It is commonly measured using price indices like the Consumer Price Index.
Inflation can have both positive and negative effects on an economy, ranging from encouraging investment and avoiding deflationary inefficiencies to increasing the opportunity cost of holding money and causing uncertainty. Most economists favor a low and steady rate of inflation to help stabilize the economy and prevent recessions.
As of the August report, inflation rose 0.4% on a seasonally adjusted basis, a move that many observers attribute to higher oil prices caused by conflict in the Middle East. These energy costs impact the prices of a wide range of goods and services.
Market expectations for interest rate hikes increased following the August inflation report, with the probability of a September increase rising to approximately 88%. Analysts suggest that the Federal Reserve may raise rates to address sticky core inflation and preserve its credibility.