Sen. Elizabeth Warren sent a letter Tuesday to Commerce Secretary Howard Lutnick urging him to explain how the Trump administration plans to prevent companies from using tariffs as a cover to hike prices.
“Tariffs can be a strategic tool to grow American industry and good manufacturing jobs, but President Trump’s across-the-board tariffs have been chaotic, not strategic,” the Democratic lawmaker wrote in the letter reviewed by Yahoo Finance.
“I am deeply concerned that President Trump is now enabling this corporate greed, allowing companies to increase prices across the board, regardless of whether goods are actually subject to tariffs.”
Warren said Federal Reserve Chair Jerome Powell raised this possibility during a press conference last Wednesday when he said in no uncertain terms that Trump’s trade agenda would be likely to drive up prices, even amid considerable uncertainty about whether the price changes would be “transitory.”
Powell offered the example of washing machines that were hit with duties during Trump’s first term. He noted that as prices on washing machines went up, so did prices on dryers, which had no new tariffs attached.
“Manufacturers just kind of followed the crowd and raised it. So, things happen very indirectly,” Powell said.
The comments came after the Fed held interest rates steady Wednesday for the second meeting in a row and maintained a prior prediction for two rate cuts at some point this year.
What the central bank did change, however, was its outlook on inflation (higher) and economic growth (lower), with Powell saying that a driving reason for the change was uncertainty stemming from Trump’s plans for an aggressive slate of new “reciprocal” tariffs on top of new duties already imposed on China, Canada, and Mexico.
Read more: What Trump’s tariffs mean for the economy and your wallet
“The reversal of progress on inflation is troubling,” Warren said in her letter to Lutnick. “I urge you to explain how you will prevent companies from using tariffs as cover to hike prices as Chair Powell has just warned,” she added.
Top administration officials have argued that the tariffs will not be inflationary or would, at the most, be a one-time adjustment.
In a speech earlier this month, Treasury Secretary Scott Bessent urged the Fed to look at any tariff-related price hikes that way — while also digging the Fed for its handling of pandemic-era inflation it expected to be transitory but didn’t turn out that way.
“I would hope that the failed ‘team transitory’ could get back together and think that nothing is more transitory than tariffs,” Bessent said at the Economic Club of New York on March 6.
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