Fed's Barr warned of trade policy risks to small businesses and supply chains

Michael Barr, a member of the Fed’s Board of Governors, voiced a cautionary note at a symposium for small businesses, underscoring the potential pitfalls of trade policy on the nation's economic landscape, as reported by Reuters. He noted that the tariff policies put in place by Trump have significantly heightened financial uncertainty. These measures are currently on hold until the summer. The economic unpredictability has already exerted a deleterious effect on both business and consumer confidence.

Barr expressed particular concern over the impact of trade restrictions on small businesses. They are key to production chains and are particularly vulnerable to logistics disruptions. The specialized components they provide are often difficult to source from alternative suppliers, which increases the risk of disruptions across entire industries.

In the current volatile environment, Barr indicated that price pressures in the consumer market could escalate. He said some companies might go bankrupt. This could cause problems for the economy similar to those experienced during the pandemic.