What the Fed’s Economic Researchers Are Learning About Tariffs and the Economy

The Minneapolis Fed, like all branches of the Federal Reserve System, doesn’t set trade policy—but it must respond to its effects. That’s the tension explored in a series of new research papers unpacking how tariffs and trade influence the Fed’s dual mandate: stable prices and maximum employment. Drawing on deep theoretical models, economists show that trade benefits are larger and longer-lasting than previously thought—especially for low-income households and developing countries. But the most striking finding? When tariffs hit, the greater threat isn’t inflation—it’s economic slowdown.

Editor’s Warning: reading economic research journalism may result in napping on the job. With that risk fully acknowledged, we still felt it important to share this information. 😉

Jeff Horwich

Federal Reserve Bank of Minneapolis

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