Fed’s Barkin Warns of Tariff-Driven Inflation Amid Consumer Pushback

Richmond Federal Reserve President Thomas Barkin has warned that upcoming tariffs could fuel inflation, though consumer resistance may limit price hikes. As the US navigates trade talks, with a US-Vietnam deal reducing tariffs on electronics and textiles and a US-EU agreement looming by July 9, 2025, Barkin notes that tariffs will likely raise costs for goods like apparel and tech.

The US-Vietnam pact exemptions offer a model for the EU’s push to shield pharmaceuticals and automotive sectors from a proposed 10% tariff. Barkin highlights that while tariffs are inherently inflationary, consumer pushback—evident in recent price sensitivity—could force businesses to absorb costs, squeezing margins. With weak US jobs data signaling economic caution, the Federal Reserve is closely monitoring tariff impacts.

A failed EU deal could trigger retaliatory tariffs, disrupting supply chains and hiking inflation, particularly for emerging markets. Barkin’s cautious outlook underscores the delicate balance between trade policies and economic stability, with the July jobs report and trade deadlines set to drive market volatility.