Recently, Trump's decision to significantly increase tariffs on imported goods has brought the term &#34;stagflation&#34; back to the forefront of discussions about the U.S. economy.On the 4th, Nick Timiraos, known as the &#34;new Federal Reserve correspondent,&#34; published an article in The Wall Street Journal expressing concerns about the outlook for the U.S. economy. He believes that tariffs are pushing the U.S. toward a predicament of weak or even stagnant economic growth and rising prices, known as &#34;stagflation.&#34;Faced with this tricky situation, the Federal Reserve finds itself in a dilemma: either choose to raise interest rates to curb inflation, which could further harm the job market; or choose to lower interest rates to stimulate the economy, which could lead to uncontrolled inflation.Over the past four years, commentators have repeatedly warned of the risks of stagflation, but it has never truly materialized. However, Austan Goolsbee, president of the Chicago Federal Reserve, pointed out that some are now proposing views similar to those of the past, arguing that tariffs are also a temporary supply shock. But he warned:<blockquote>&#34;Once I mention the word 'temporary,' you should be cautious, because that logic did not hold during 2020.&#34;</blockquote><h2>Inflation Pressure Emerges Under Tariff Shock</h2>According to CCTV News, Trump announced a 25% tariff on goods from Mexico and Canada. Ray Farris, chief economist at Prudential PLC, pointed out that this will &#34;seriously disrupt corporate investment plans,&#34; while &#34;pushing up inflation and impacting household real income.&#34;Although U.S. Secretary of Commerce Howard Lutnick hinted at the possibility of canceling some tariffs, economists warned that if tariffs persist, the risk of economic recession will significantly increase. Tim Mahedy, chief economist at Access/Macro, stated:<blockquote>&#34;The situation could spiral out of control quickly... Although it has not yet reached the levels of the 1970s and 80s, signs of stagflation are already emerging.&#34;</blockquote>Timiraos cited the latest market sentiment indicators and corporate comments showing that the threat of rising prices has already led to a decline in corporate confidence. Corie Barry, CEO of electronic retail giant Best Buy, stated on Tuesday that Mexico is one of the company's important sources for consumer electronics. The company's stock price plummeted 13% that day.<blockquote>&#34;We expect suppliers to pass some of the tariff costs onto retailers, and American consumers are likely to face price increases.&#34;</blockquote>Federal Reserve officials believe that inflation expectations are a key driver of future inflation, and some indicators have already shown problems. A survey from the University of Michigan and inflation-protected bonds indicate that consumers and investors expect inflation to be slightly higher in the coming years.John Williams, president of the New York Federal Reserve, stated on Tuesday that he expects tariffs to lead to inflation this year that is higher than his previous expectations:<blockquote>&#34;The impact of tariffs on consumer goods will be reflected relatively quickly in the prices consumers pay, while tariffs on intermediate goods will take longer to manifest, but the impact will be more lasting.&#34;</blockquote><h2>The Policy Dilemma of the Federal Reserve</h2>Timiraos believes that the economic threat posed by tariffs is particularly tricky for the Federal Reserve.The mission of the Federal Reserve is to maintain low and stable inflation while sustaining a healthy job market. However, tariffs represent a &#34;supply shock,&#34; which raises inflation (requiring interest rate hikes) while also harming employment (requiring interest rate cuts). In this situation, the Federal Reserve must choose which threat to address .Researchers at the Boston Fed estimate that imposing a 25% tariff on Canada and Mexico could increase core inflation by 0.5 to 0.8 percentage points, depending on the response of U.S. importers. This estimate does not take into account factors such as consumers switching to cheaper domestic goods, trade retaliation, or exchange rate fluctuations.Alberto Musalem, President of the St. Louis Fed, warned at an economic conference in Washington:<blockquote>&#34;The coexistence of a deteriorating job market and rising inflation could lead to difficult choices.&#34;</blockquote>He referenced the last instance of stagflation in the U.S. during the 1970s, when the Federal Reserve wavered between raising interest rates to combat inflation and cutting rates to address high unemployment. This &#34;stop-go&#34; policy is widely viewed as a failure, as it neither effectively controlled inflation nor curbed unemployment.Austan Goolsbee, President of the Chicago Fed, pointed out that some believe tariffs are theoretically also a temporary supply shock, similar to the inflation seen in the early pandemic, but &#34;once I mention the word 'temporary,' you should be cautious, because that logic did not hold during the pandemic.&#34;Dean Maki, Chief Economist at hedge fund Point72 Asset Management, stated:<blockquote>&#34;This is not a good sign for the Federal Reserve, and I think it will also concern the government.&#34;</blockquote>Risk Warning and DisclaimerMarkets are risky, and investments should be made cautiously. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this is at your own risk

Trump announced a significant increase in tariffs on imported goods, sparking discussions of "stagflation." Nick Timiraos of the New Federal Reserve Communications Agency pointed out in The Wall Street Journal that the U.S. economy faces a dilemma between raising interest rates to curb inflation or cutting rates to stimulate the economy. The president of the Chicago Federal Reserve warned that tariffs could lead to an increased risk of stagflation, and economists also stated that if tariffs persist, the risk of economic recession will significantly increase. Business confidence has declined, and Best Buy's stock price plummeted by 13%

- Trump's recent decision to significantly raise tariffs on imports has reignited discussions about "stagflation" in the U.S. economy.  
- Economists warn that these tariffs could lead to weakened economic growth and rising inflation, complicating the Federal Reserve's policy decisions between raising or lowering interest rates.  
- The potential impact of these tariffs includes increased inflation rates and disrupted business investment plans, raising concerns about a possible economic recession.

The new Federal Reserve News Agency discusses "stagflation": The Federal Reserve faces a dilemma of "raising inflation" or "damaging employment."