The head of the Institute of International Finance predicts that Trump tariffs may result in increased U.S. interest rates.

• The Institute of International Finance warns that extreme tariffs proposed by U.S. presidential candidate Donald Trump could disrupt the disinflation process and result in higher interest rates.
• Trump's economic pitch to voters includes universal tariffs, with suggestions of a 20% tariff on all goods from all countries and a higher 60% rate on Chinese imports.
• Trump has previously stated that universal tariffs would create a "ring around the country" and denied they would cause inflation.

The Institute of International Finance warns that extreme tariffs proposed by U.S. presidential candidate Donald Trump could disrupt the disinflation process and result in higher interest rates.

According to Tim Adams, president and CEO of the IIF financial services industry trade group, it is assumed that there will be higher inflation and interest rates due to the presence of tariffs.

"Whether it's a one-time occurrence or a pattern over time, the appropriate response depends on what retaliation entails and whether it evolves over time. However, it would undoubtedly be a relief to see progress in reducing prices," Adams stated.

Trump has made universal tariffs a central component of his economic campaign, proposing a 20% tariff on all goods from all countries and a higher 60% rate on Chinese imports. He has also promised to impose a 100% tariff on every car entering the Mexican border and to apply a 100% tariff to any country that attempts to "leave the U.S. dollar."

Trump argued that increasing tariffs would encourage companies to build factories in the US to avoid paying the tariffs.

Trump has previously stated that universal tariffs would create a "ring around the country" and denied they would cause inflation.

Analysts have cautioned that the overall package proposed by Trump, including higher tariffs and immigration restrictions, could lead to inflationary pressures, although some of the impact may be mitigated in the short term.

In September, U.S. inflation decreased to 2.4% from a high of 9% in June 2022 due to pandemic supply chain disruptions and massive fiscal stimulus. The Federal Reserve began interest rate cuts in September with a 0.5% reduction, despite worries about the potential for disinflation.

The possibility of a Trump presidency in the U.S. emerges amidst a growing trend of global trade division. The European Union recently imposed higher tariffs on Chinese-made electric vehicles, accusing car manufacturers there of receiving "unfair subsidies."

Adams stated on CNBC that Trump and Harris were running as "change candidates" instead of promising continuity.

Adams stated that the concern about Trump is that he is anti-internationalist, doesn't prioritize transatlantic relations, and will likely focus more on isolationism and protectionism. While some of these concerns may be exaggerated, there are certainly elements of this in his approach.

"It is certain that Vice President Harris will be more involved in global affairs and more enthusiastic about international institutions."

CNBC has contacted the Trump campaign for comment.

— CNBC's Rebecca Picciotto contributed to this story.