US concern about impact of China trade war on jobs and prices growing
Federal Reserve minutes show how implications of dispute for US economy is becoming more of a worry for policymakers
US Federal Reserve officials discussed how global trade disputes, including the current stand-off with China, could batter businesses and households, minutes of the US central bank’s last policy meeting showed.
While the meeting in Washington focused on discussions about whether to raise interest rates soon to counter excessive economic strength, it also examined the risk from the ongoing trade tensions.
The Trump administration has raised tariffs on imports from a range of countries, including on US$34 billion of Chinese goods, triggering retaliatory tariffs on US exports.
The discussion outlined the tough situation the Fed could find itself in should the trade disputes worsen, with US businesses potentially needing to scale back hiring and consumers possibly facing higher prices on imports.
The Fed is tasked by law with fostering full employment and steady prices. “All participants pointed to ongoing trade disputes as an important source of uncertainty and risks,” according to the minutes. Policymakers pointed out that a large prolonged trade dispute could hurt business sentiment, investment spending and employment.
Wide-ranging tariff increases would reduce the purchasing power of US households, according to the minutes.
Minutes of the meeting read: “Business contacts in a few districts reported that uncertainty regarding trade policy had led to some reductions or delays in their investment spending.