Dow Tumbles 1,600 Points After Powell Says Tariffs Will Raise Inflation

U.S. stocks were battered by a sell-off Friday after China retaliated against the United States in response to President Donald Trump’s tariffs—escalating a global trade war.

Powell acknowledged that inflation could remain elevated due to Trump’s tariffs. I Photo: Board of Governors of the U.S. Federal Reserve System Facebook

The Dow fell by 1,630 points, or 4%. The broader S&P 500 dropped 4.6%, while the tech-heavy Nasdaq Composite declined 4.7%, John Towfighi reported for CNN. Investors have grown increasingly fearful that a sharp escalation in the trade war could plunge the U.S. and global economies into a recession.

Federal Reserve Chairman Jerome Powell declined to predict whether America’s economy would reach that point, but he acknowledged in a Q&A session that inflation could remain elevated due to Trump’s tariffs, and growth could slow more than expected—because the scope of the tariffs was far greater than the Fed had anticipated.

President Donald Trump called on Powell Friday to cut interest rates—a demand the president has made repeatedly of his hand-picked central bank chief, despite their growing rift, David Goldman also reported for CNN.

Powell said recently that the Fed is in no rush to take any action, despite Trump’s historic tariff increase.

“Our macroeconomists are all working hard to digest the news of this week and filter that into their forecasts. Policymakers are doing very much the same thing,” Powell said at a recent conference. “I will say, though, it feels like we don’t need to be in a hurry.”