• President Donald Trump called on Federal Reserve Chair Jerome Powell to slash interest rates to avoid an economic slowdown. Still, “it remains to be seen how much rate cuts can actually stem the bleeding” when it comes to things such as consumer goods and housing, which are especially vulnerable to tariffs, a researcher said. Plus, if Trump were to fire the head of the central bank, it could backfire “spectacularly.”

The president wants lower interest rates—that’s no secret. He has called on the central bank again and again to cut. “There can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” President Donald Trump wrote on social media, referring to Federal Reserve Chair Jerome Powell.

But it may not be so cut-and-dried. Neil Dutta, head of economic research at Renaissance Macro, warned the central bank can’t solve all when it comes to tariffs and trade wars.

“Keep in mind that the Fed doesn’t really have the tools to offset a trade war,” Dutta said Monday on CNBC. “Think about the areas of the economy that the trade war affects the most. It’s things like consumer durable goods; it’s things like housing. These are industries that are actually quite affected by tariffs…so it remains to be seen how much rate cuts can actually stem the bleeding in those areas.”

Tariffs can induce inflation, but whether it happens to be a one-time shock to prices or an ongoing one remains to be seen. Tariffs can cause a slowdown, too, if consumer and business spending drops because things become costlier. Because of these factors, the Fed is currently in wait-and-see mode. It can’t cut interest rates in fear of inflation becoming a problem once again, but if unemployment becomes a problem, the central bank may have no choice. Either way, according to Dutta, interest-rate cuts may not shield consumer goods or housing from the tariff effect—and a slowdown is imminent, if it hasn’t already begun.

“I think we’re jumping into recession,” he said. “We’re in it. We’re in it,” Dutta later said.

He sees housing slowing more, investment spending dropping, and employment moderating. The only thing to stop the economy from plunging into a recession is a policy shift, he said, adding “once the confidence genie is out of the bottle, it’s really tough to put it back in.”

“This is never an on and off switch with the president—it’s a dial,” Dutta continued. “So if he turns off the heat one week, I mean, it can be turned back on another week. So that kind of keeps this uncertainty situation roiling the markets, I think, for the foreseeable future.”

Things calmed somewhat after Trump hit pause on his liberation day tariff regime, which had fueled a selloff in the stock and bond markets. But almost two weeks since then, markets are still swinging, especially amid Trump’s verbal attacks against Powell. He recently said the Fed chair’s termination couldn’t come fast enough, and it has prompted discussion about whether Trump can or will actually fire the head of the central bank.

“We’re already in the worst-case scenario for the economy,” Dutta said. If Trump fires Powell and replaces him with someone more politically pliant, “it could be something that backfires on Trump spectacularly and would keep longer-term interest rates even higher than they otherwise are.”