The US Federal Reserve is in 'firefighting' mode studying the impact of Trump's tariffs on the economy.

The Federal Reserve of the United States has conducted a study on the effects of the Trump administration's trade policy on the country's economy. They analyzed potential revenue losses, rising inflation, and the impact on various regions this year.

'This is one of the largest shocks to the US economy in decades,' said Fed Governor Christopher Waller. He compared the central bank's work to 'putting out fires' after discovering that the tariffs imposed by Trump on April 2 were larger and more widespread than expected.

The Federal Reserve Bank of Dallas's research showed that tariffs on Chinese goods introduced in February and March led to a price increase of a third of a percentage point, including food and energy. Without these tariffs, prices could even have decreased, which keeps the Fed from changing the baseline interest rate at 4.25%-4.5%.

Impact of tariffs on consumption in the US

According to the Federal Reserve Bank of San Francisco, high tariffs and retaliatory measures could reduce real incomes by 1% nationwide. The largest losses are expected in California, Texas, and Michigan. However, surveys of businesses indicate that rising costs may be passed on to consumers over two years, but this should not negatively impact employment levels.

Research prepared by the US Federal Reserve indicates a serious impact of Trump's trade policy on the country's economy. At the same Time, studies point to a potential risk of declining real incomes and rising prices as a result of higher tariffs and retaliatory measures.