MICHEL MARTIN, HOST:
President Trump is feuding with Federal Reserve Chairman Jerome Powell. In a post on his Truth Social account, Trump said Powell's termination, quote, "cannot come soon enough," unquote. Now, it isn't clear whether the president was calling for the Fed chair to be dismissed immediately or at the end of his term in May of 2026. In his post, Trump said Powell was, quote, "too late and wrong," unquote, on interest rates. This all comes as Americans are feeling gloomier about the economy.
A MART脥NEZ, HOST:
Let's talk to NPR's Scott Horsley. So, Scott, what can you tell us about the tension between Trump and Powell?
SCOTT HORSLEY, BYLINE: Well, President Trump has been urging the Fed for some time to lower interest rates. He always wants to see borrowing costs as low as they can be. But the president's making that more difficult, actually, with his trade war. Chairman Jerome Powell gave a speech in Chicago yesterday where he warned that Trump's tariffs will almost certainly push prices in the U.S. higher, at least in the short term. And that suggests interest rates may need to stay elevated in order to avoid rekindling inflation. Now, you know, the president's social media post this morning criticizing that move and saying that the Fed is too late to cut interest rates certainly raises the temperature between Trump and Powell. The Fed chairman's term does run through next May, and Powell has been adamant that he plans to serve out that term. He has tried to keep a low profile and avoid antagonizing the president but that's a favor that Trump has not returned.
MART脥NEZ: Yeah. And you know what? When I think about, like, the way people have thought about spending, I mean, spending was up last month. So, I mean, if there's all this uncertainty, why are people spending money?
HORSLEY: Well, people are spending money in large part to avoid Trump's tariffs. A lot of the spending that we saw in March was at auto dealers. Auto sales were up almost 6% last month. And, you know, that suggests people were maybe advancing their car purchases to beat the tariffs that took effect at the beginning of April. And with good reason. The Center for Automotive Research says those new import taxes will add $4,000 and $9,000 to the price of a new car. So if you can get in early, that can save some serious money. Even domestic cars typically contain a lot of imported parts, so they're going to get more expensive, as well.
MART脥NEZ: Now, where else should we look for the effects of these tariffs if we're kind of trying to search for them?
HORSLEY: Well, you know, if people splurged in March to get ahead of the tariffs, we're likely to see some payback in the months to come with reduced spending. Gene Seroka heads to the Port of Los Angeles, which is one of the busiest container ports in the country. It handles a lot of cargo traffic coming in from Asia. Of course, China's been hit with these triple-digit tariffs in the Trump era, and Seroka is projecting at least a 10% drop in incoming cargo in the second half of this year.
GENE SEROKA: Global trade will slow, which will hit the economy worldwide because of these policies. And of course, prices for us will go up markedly. Buckle up. This is going to get really bumpy for us.
HORSLEY: The irony here is before Trump launched this trade war, we were seeing real progress on inflation, which might have paved the way for the interest rate cuts that the president says he wants to see. Core inflation last month was the lowest it's been in four years, but hopes that Jerome Powell and his colleagues on the Fed could engineer a soft landing have really been battered by Trump's tariffs. Forecasters are now projecting a double whammy of both higher prices and slower economic growth.
MART脥NEZ: That's all we seem to be doing, Scott. It's just buckling up all the time with the economy. That's NPR's Scott Horsley. Scott, thanks.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR鈥檚 programming is the audio record.
