Powell says tariffs uncertainty peaked in April.

Powell says tariffs uncertainty peaked in April.

Federal Reserve Chair Jerome Powell stated on Tuesday that the uncertainty surrounding President Trump's tariffs has peaked, offering a glimmer of stability for the U.S. economy. Powell's remarks came during his testimony before the House Financial Services Committee, where he highlighted the Fed's cautious approach to interest rate cuts [3].

Powell noted that while tariffs have created a highly uncertain economic path, the central bank is adopting a wait-and-see approach. He emphasized that the extent to which tariff-induced inflation will impact consumers remains unknown, and the Fed will continue to monitor the situation closely. Powell's comments underscore the Fed's decision to maintain interest rates unchanged last week, despite Trump's persistent calls for faster rate cuts [3].

The Fed chair's statement follows a period of heightened market volatility, driven by the uncertainty surrounding Trump's trade policies. In April, the "Liberation Day" tariff pause was announced, providing temporary relief to financial markets. However, the pause is set to expire on July 8, and the future of trade negotiations remains unclear [1]. Despite the ongoing uncertainty, stocks have shown resilience, with a 20% increase since the pause was implemented, indicating a degree of market confidence [1].

Powell's comments also come amid a backdrop of mixed economic signals. On one hand, businesses are increasingly anxious about the future, with some economists predicting a 25% chance of recession in the next 12 months due to tariffs [1]. On the other hand, consumer sentiment has improved, and the U.S. has secured trade deals with the U.K. and a truce with China, albeit temporarily [1].

FedEx Corp. has also felt the impact of tariffs, with the company forecasting a challenging first quarter due to expectations of continued pressure on shipments from China to the U.S. The company's stock fell by 6% after hours on Tuesday following the announcement of its first-quarter earnings, which fell short of Wall Street's expectations [2]. FedEx's outlook for the year remains uncertain, with the company aiming for $1 billion in cost savings but providing limited visibility into the months ahead [2].

In conclusion, Powell's remarks signal a cautious optimism, suggesting that the worst of the tariff uncertainty may be behind us. However, the ongoing trade negotiations and the potential for new tariffs in the coming months will continue to influence economic sentiment and market behavior.

References:
[1] https://www.axios.com/2025/06/25/trump-tariffs-china-mexico-canada
[2] https://www.morningstar.com/news/marketwatch/20250624388/fedex-hopes-to-save-1-billion-this-fiscal-year-but-its-profit-forecast-is-still-sinking-shares-as-tariffs-weigh-on-shipments
[3] https://www.npr.org/2025/06/24/nx-s1-5442665/federal-reserve-powell-economy-interest-rates-tariffs