US Fed Chair warns new tariffs will likely raise inflation, retard growth

US President Donald Trump's tariffs risk higher unemployment and will likely cause inflation to rise and growth to slow, Federal Reserve Chair Jerome Powell said on Friday.

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US President Donald Trump's tariffs risk higher unemployment and will likely cause inflation to rise and growth to slow, Federal Reserve Chair Jerome Powell said on Friday.

"It is now becoming clear that the tariff increases will be significantly larger than expected," Powell told an event in Virginia.

"The same is likely to be true of the economic effects, which will include higher inflation and slower growth," he said, adding that it was "too soon" to consider making changes to US monetary policy.

Trump's announcement earlier this week of heavy levies against top trading partners has rocked global markets as investors have grappled with the prospect of higher import costs on everything from shoes to shrimp.

The larger-than-expected measures announced on Wednesday stack on top of earlier countryspecific levies, meaning that China, for example, will now face a new levy totaling 54 per cent.

Other top trading partners will also see higher rates, with the European Union now facing a 20 per cent tariff from April 9, and India looking at a 26 per cent levy.

The Trump administration has also targeted specific sectors of the economy, recently slapping a 25 per cent tariff on automobiles not made in the United States.

Powell's comments suggest the Fed is in no rush to cut its benchmark lending rate from its current elevated level of between 4.25 and 4.50 per cent, as it continues its struggle to bring inflation down to its long-term two- per cent target.