Neel Kashkari warns that the ongoing trade standoff with Canada could prolong U.S. inflation.
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, stated that the current tariff fight with Canada may extend U.S. inflation if the trade dynamic remains unresolved. The conflict began on Saturday after negotiators failed to reach an agreement, leading the U.S. to impose 50% tariffs on Canadian products. Kashkari noted that Canada is a vital trading partner, with the two nations exchanging $880 billion in goods and services in 2025. He explained that while supply shocks like the war with Iran are major drivers of inflation, trade and tariff conflicts are also significant factors. Kashkari suggested that once a steady state in trade relations is established, businesses can adjust and the inflationary impact will fade. Canadian Prime Minister Mark Carney has promised retaliatory tariffs against the U.S. starting September 8, targeting sectors such as steel, dairy, and electronics. U.S. Trade Representative Jamieson Greer confirmed that no new talks are currently planned to resolve the standoff.