Kashkari warns that Trump's tariffs could lead to inflation if they spark a global trade war.

• If global trade partners retaliate against tariffs, long-term inflation will be negatively impacted, according to Minneapolis Federal Reserve President Neel Kashkari.
• One of Donald Trump's key economic plans for his second term is to apply universal tariffs to all imports from all countries, including a specifically targeted 60% rate on China.
• The hardline trade approach has raised concerns among economists, Wall Street analysts, and industry leaders about its inflationary impact, despite the recent decline in inflation and the Fed's decision to lower interest rates.

If global trade partners retaliate against President-elect Donald Trump's tariff proposals, long-term inflation could worsen, according to Minneapolis Federal Reserve President Neel Kashkari, who made the statement on Sunday.

According to Kashkari, one-time tariffs should not have a lasting impact on inflation.

If there's a tit for tat and one country imposes tariffs, it can escalate, making it more concerning and uncertain, as Kashkari stated.

Trump's imposition of import taxes on Chinese goods during his first term led China to retaliate with tariffs on the U.S.

Trump's second term economic plan includes imposing universal tariffs on all imports from all countries, including a 60% rate on China.

The hardline trade approach has raised concerns among economists, Wall Street analysts, and industry leaders about its inflationary impact, particularly as inflation has recently begun to decrease from its pandemic-era highs.

"Kashkari stated that we have made significant progress in reducing inflation. However, he emphasized that we must continue to work until we achieve our goal. Currently, we are on a positive trajectory."

The Fed on Thursday passed its second consecutive interest rate cut, continuing its effort to loosen monetary policy as inflation approaches the central bank's 2% target. Kashkari expects another cut in December, but that will depend on the data at that time.

Kashkari stated that while Trump has proposed a comprehensive plan for deporting immigrants, the Fed is still uncertain about the inflation threat and is adopting a "wait and see" approach before making any changes to its policy.

The Fed values its political independence, which enables it to base its monetary policy solely on the health of the U.S. economy, rather than election incentives, as Trump and his supporters, including billionaire Elon Musk, have advocated for.

But Kashkari said he is not concerned about politics permeating Fed decisions.

""Our economic jobs should dictate what we're doing," he said confidently."