Why Trumps tariff plans could lead to higher interest rates | Money [Video]

Washington (CNN) — President-elect Donald Trump’s promise to impose stiff tariffs against America’s three biggest trading partners is widely expected to push prices higher, which would set the stage for the Federal Reserve to stop cutting interest rates and possibly raise them instead.

Fed Chair Jerome Powell said in a recent speech in Dallas that it is still too early to consider how Trump’s tariff plans would affect the US economy. Campaign rhetoric is one thing, but enacted policy is another. Trump, however, says he won’t waste any time, threatening last week to slap 25% tariffs on Mexico and Canada and an additional 10% duty on Chinese goods on the first day of his second term on January 20.

Trump’s tariffs would almost certainly push up prices for imported goods like avocados, cars and tequila. That would affect about $1.5 trillion of goods that flow throughout North America, according to an estimate from the International Monetary Fund.

Wall Street has already shown some concernover the …