Trade uncertainties make Fed’s job tougher

WASHINGTON — After the Federal Reserve cut interest rates Wednesday for the first time in a decade, Chairman Jerome Powell made a striking acknowledgement:

In the Trump era, the Fed faces a steep learning curve.

The Fed is supposed to set interest rates based on gauges of inflation and employment. But President Donald Trump has injected a wild card into the mix with his combative trade wars and tariffs on imports. The resulting economic uncertainties, Powell said, had significantly influenced the Fed’s decision to cut rates.

“Trade is unusual,” the Fed chairman told reporters at a news conference Wednesday. “There isn’t a lot of experience in responding to global trade tensions. So it is something that we haven’t faced before and that we are learning by doing.”

Powell’s mission grew even tougher after Trump announced plans Thursday to impose a 10% tax on $300 billion of Chinese imports, meaning that virtually all Chinese goods would be tariffed beginning in September. The president’s move might have been predicated, in part, on his confidence that Powell’s Fed stands ready to cut rates again.

The problem is that cutting loan rates — especially when they’re already low — isn’t likely to ease uncertainties from a prolonged trade conflict. What rate cuts can do is help insulate other parts of the economy from trade disruptions and support the stock market.

Yet Trump has attacked