- Howard Lutnick stated that the US government is collecting over $30 billion per month in tariff revenue
- Jerome Powell is currently taking a wait-and-see stance on rate cuts
- In May, there was a record in US customs receipts – $23 billion
US Commerce Secretary Howard Lutnick shared a lengthy X post about interest rates, urging the central bank to lower them. He stated that the US government is collecting over $30 billion per month in tariff revenue, which he argues is a positive inflow that reduces Treasury borrowing needs.
Lutnick cites Jerome Powell’s testimony that tariff-driven inflation has not materialized in the past 2 and a half months, as he claims there is zero impact, and thus inflation remains under control.
He continues to argue, saying that given low inflation and high tariff revenues, the Fed should cut interest rates to lower federal borrowing costs, stimulate economic growth, and naturally reduce deficits.
Lutnick then criticized Powell for ignoring this formula and sided with US President Donald Trump’s call for rate cuts, accusing Powell of being afraid to act.
This response is directly referencing Powell’s testimony from June 24, where he affirmed a wait-and-see stance on rate cuts. Powell noted uncertainties around tariff impacts, saying that inflation may rise in the summer, and kept cuts toward September or October in mind.
Tariff-driven inflation
While overall CPI (Consumer Price Index) remains subdued, Powell and others confirm goods inflation due to tariffs is emerging. For instance, in May, there was a record in US customs receipts, $23 billion to be exact. This is generally indicative of tariff collections and supports the estimated $30 billion monthly revenue.
Apart from Lutnick, Trump and his administration, including Vice President JD Vance, are openly criticizing Fed independence, pressing for rate cuts. So far, Powell isn’t budging and is defending the Fed’s data-driven, independent stance.
While tariff income boosts government coffers, many economists argue the tax primarily increases costs for consumers and businesses, and they view it as a reallocation of funds, not a truly free revenue stream.
Lutnick’s view suggests rate reductions would lower debt service expenses, and while accurate, this may conflict with the Fed’s dual mandate and Congress’s role in fiscal policy.
As it currently stands, most analysts expect cuts later in the year, probably sometime around late Q3 or Q4 when inflation signals become clear.
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