On April 24, the latest issue of the Beige Book released by the Federal Reserve used 107 high-frequency terms of "tariffs" and 89 "uncertainties" to outline the complex picture of the U.S. economy under the shock of trade policies.

Trade policy shocks: From price transmission to investment freezes

The penetration of tariff policies into the real economy far exceeds market expectations.

The report shows that key industries such as steel, aluminum, and auto parts bear the brunt, and companies are forced to pass on cost pressure by shortening pricing cycles, adding tariff surcharges, and even daily price adjustments.For example, machinery manufacturers in the Federal Reserve Area of Chicago were forced to adjust product prices daily due to soaring costs caused by raw material tariffs; coffee roasters in the Richmond Federal Reserve suffered "historic cost increases", while metal sheet manufacturers fell into a survival crisis due to a sharp drop in orders.

Consumer behavior has also been distorted: the "rush rush" before the tariffs came into effect pushed up demand for durable goods such as cars, but the overall decline in consumption of non-durable goods reflects households 'concerns about continued price increases in the future.What is more serious is that companies in areas such as Atlanta and St. Louis have suspended capital expenditures due to policy uncertainty, military equipment manufacturers have bluntly stated that the "environment is too chaotic" and frozen investment, and the construction industry expects demand to "fall off a cliff" due to soaring costs.InvalidParameterValue

The clouds of stagflation are beginning to emerge: the spiral dilemma of wages and prices

Although the Federal Reserve emphasizes that inflationary pressures are "temporary", the micro dynamics revealed by the Beige Book have shown signs of stagflation.

Most regions reported accelerated wage growth, and the San Francisco Fed even observed a phenomenon of "wage and price increases," which contradicted signs of corporate layoffs: on the one hand, continued expansion in service industries such as health care pushed up labor costs; on the other hand, manufacturing employment stagnated, and Atlanta, Minneapolis and other places were preparing for layoffs or actual actions.

This differentiation reflects the reshaping of the labor market by the restructuring of the supply chain-low-skilled jobs are reduced as industries move, and demand for high-skilled services increases due to localized production.In addition, price pressure on imported goods is spreading to the entire industry. Companies generally expect that the growth rate of input costs will further accelerate in the next six months, and it is a foregone conclusion that consumers will eventually bear the passing-on costs.InvalidParameterValue

The Federal Reserve's Policy Dilemma: The Struggle between Interest Rate Rate Reduction Expectations and Inflation Resilience

Faced with economic slowdown and inflationary stickiness, the Fed is in a dilemma.

Although there is a high probability that interest rates will remain unchanged at the May meeting, the market has already bet that interest rate cuts will start in June, and a 50 basis point rate cut is expected throughout the year.

However, Powell repeatedly stressed that "inflation remains above target" and blamed some of the blame on tariff shocks, saying the impact was "difficult to quantify but not to ignore."This caution stems from data contradictions: on the one hand, core PCE inflation expectations have been raised to 2.8%, and GDP growth forecasts have been lowered from 2.1% to 1.7%;

On the other hand, consumers may intensify the contraction of demand after the rush to buy recedes, forming a combination of "weak growth + high inflation".Policymakers tried to release liquidity by slowing down balance sheet reduction (the monthly ceiling on national debt reduction from 25 billion to US$5 billion), but the move was interpreted by the market as a "technical dove" and instead strengthened expectations of interest rate cuts.InvalidParameterValue

Restructuring global supply chains: Enterprise survival and game

The tariff storm is accelerating the reorganization of global industrial chains.

The report shows that companies that rely on imported raw materials face triple challenges: soaring costs, order uncertainty, and rising compliance costs.

For example, if China foundries using American chips turn to domestic sales, they will have to pay an 84% tariff, forcing companies to accelerate the transfer of orders to Southeast Asian or local suppliers.U.S. agricultural exporters have also suffered heavy losses. The cost of landing soybeans has soared from 4000 yuan/ton to 7000 yuan. The collapse of price advantage has prompted China buyers to turn to South American markets.

At the same time, science and technology and military enterprises have become the focus of "rules warfare." China has carried out "asymmetric strikes" through export controls and lists of unreliable entities, such as cutting off U.S. photonics's access to rare earth resources such as dysprosium and terbium, and directly paralyzing its laser device production.Companies 'response strategies are polarized: short-term dispatch of "goods in transit" to take advantage of the 34-day exemption period, while long-term dispatch of risk reduction through foreign exchange hedging (such as CME RMB futures locking in 70% of revenue) and supply chain localization.InvalidParameterValue

Political pressure and market turmoil: A test of independence

The Trump administration's pressure on the Federal Reserve reaches new heights.

The president publicly called for an "immediate interest rate cut" and threatened to fire Powell, causing the gold price to exceed US$3050 per ounce at one point, and the fluctuations in the US dollar index intensified.Although the Federal Reserve emphasizes policy independence, the Beige Book statement that "the outlook has deteriorated significantly" and Powell's admission of the impact of tariffs suggest that it is difficult for monetary policy to completely escape the political game.

Market reactions were also divided: Bitcoin returned to above US$85,000 due to loose liquidity expectations, and the U.S. stock technology sector rebounded strongly, but the Treasury bond yield curve inverted and deepened, reflecting that investors 'concerns about economic recession have not disappeared.InvalidParameterValue

The essence of this tariff shock wave is the struggle for the dominance of rules under the ebb tide of globalization.When "uncertainty" becomes a high-frequency word, companies need to find a new balance between supply chain resilience, compliance costs and market opportunities, while the Federal Reserve needs to maintain its policy focus amid stagflation risks and political pressure.