Investing.com -- The President of the Chicago Federal Reserve Bank, Austan Goolsbee, expressed concerns on Tuesday about the size of the tariffs announced by U.S. President Donald Trump, stating they are significantly larger than initial estimates. The potential impact on consumers and businesses, and how quickly these higher costs will be absorbed, remains uncertain.

Goolsbee, in an interview with Illinois Public Radio, warned that these tariffs could potentially slow down the economy. He said businesses and consumers might respond to the increased costs by cutting back on spending and investments, which could lead to an economic slowdown.

The Chicago Fed President also referred to the tariffs as a "negative supply shock." This term is used to describe an unexpected event that suddenly decreases the supply of a product or service, causing its price to increase.

Goolsbee expressed concern about the potential for rising inflation, drawing on recent experiences of uncontrolled inflation. He cautioned that the Federal Reserve’s response to this situation is not necessarily straightforward.

He also voiced his worry that the new tariffs could reverse progress made over the past five years in stabilizing the economy. Goolsbee said, "The anxiety is this is just going to take us back to a thing we spent the last five years desperately trying to get away from." The exact implications of the tariffs and their impact on the economy are yet to be seen.

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