Fed Officials Warn Tariffs Hurt Consumers, Raise Inflation Concerns

NY Fed's Williams says tariffs have 'overwhelmingly' raised US prices, while KC Fed's Schmid warns of inflation's 'severe' impact on low-wage workers

Mar. 3, 2026 at 8:55pm

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In separate remarks, New York Federal Reserve President John Williams and Kansas City Fed President Jeff Schmid warned that the costs of tariffs imposed by the Trump administration have largely been passed on to American consumers and businesses, raising inflation concerns. Williams cited a study finding up to 90% of tariff costs have been absorbed domestically, contradicting the administration's claims that exporters would bear the burden. Schmid also cautioned that high inflation disproportionately harms low-wage earners, and said the Fed must remain vigilant to maintain its credibility on price stability.

Why it matters

The Fed officials' comments highlight the growing tensions between the central bank's mandate to maintain price stability and the White House's push for lower interest rates. With inflation running above the Fed's 2% target for years, the officials signaled a willingness to prioritize fighting inflation over delivering the rate cuts demanded by the administration.

The details

Williams said the tariffs have 'meaningfully increased U.S. prices of imported goods' and that their full impact has likely not yet been felt by businesses and consumers. He cited a study finding up to 90% of the added costs from tariffs have been passed on domestically, contradicting claims from Trump administration officials that exporters would absorb the burden. Meanwhile, Schmid warned that high inflation 'affects, in a really severe way, the bottom half of our wage earners' and said the Fed cannot be complacent about losing its credibility on price stability.

  • On March 3, 2026, New York Fed President John Williams made remarks at a Washington conference.
  • Also on March 3, 2026, Kansas City Fed President Jeff Schmid spoke at an event in Denver.

The players

John Williams

President of the Federal Reserve Bank of New York.

Jeff Schmid

President of the Federal Reserve Bank of Kansas City.

Kevin Warsh

Likely to become the next Federal Reserve Chair, replacing Jerome Powell, whose term expires in May 2026.

Jerome Powell

Current Federal Reserve Chair, whose term expires in May 2026.

Donald Trump

Former U.S. President who imposed tariffs that the Fed officials say have hurt consumers and businesses.

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What they’re saying

“The tariffs have overwhelmingly been borne domestically.”

— John Williams, President, Federal Reserve Bank of New York

“Though I believe our credibility on inflation remains intact, I don't think we can be complacent, and the costs of losing that credibility are high.”

— Jeff Schmid, President, Federal Reserve Bank of Kansas City

“Inflation affects, in a really severe way, the bottom half of our wage earners, and I want to stay really sensitive to that.”

— Jeff Schmid, President, Federal Reserve Bank of Kansas City

What’s next

The June FOMC meeting would likely be Kevin Warsh's first as chair if he is confirmed by the Senate to replace Jerome Powell as Federal Reserve Chair. Traders are watching to see if Warsh will take a more dovish stance on interest rates compared to his previous hawkish views.

The takeaway

The comments from Fed officials Williams and Schmid highlight the growing tension between the central bank's mandate to control inflation and the White House's push for lower interest rates. With inflation running hot, the Fed appears willing to prioritize price stability over delivering the rate cuts demanded by the administration, even as it risks a political clash.