• The Federal Reserve is expected to cut interest rates this week by 25 basis points.
• Inflation has ticked back up in recent months, and economists think the job market is still robust.
• The outlook for 2025 is more uncertain while the Fed waits to see how Trump will impact the economy.

The final interest-rate decision of the year is coming this week, and it's likely to give Americans some more financial relief.

On Wednesday, the Federal Open Market Committee is expected to announce another interest-rate cut. As of Monday afternoon, CME FedWatch, which estimates interest-rate changes based on market predictions, forecasts a close to 100% chance the Federal Reserve will cut rates by 25 basis points.

Data out last week showed overall inflation has sped up. The consumer price index's year-over-year growth rate rose from 2.4% in September to 2.6% in October before climbing to 2.7% in November. Core CPI, which excludes volatile food and energy prices, has been holding steady, with a year-over-year change of 3.3% from September to November.

Jerome Powell, chair of the Fed, said at The New York Times' DealBook Conference on December 4 that "we're in a very good place with the economy," but inflation is still not quite where the central bank wants it to be.

"The labor market is better, and the downside risks appear to be less in the labor market, growth is definitely stronger than we thought, and inflation is coming a little higher," Powell said. "So the good news is that we can afford to be a little more cautious as we try to find neutral."

Slower job growth and higher unemployment may add fuel to the argument for continuing to cut, while a tighter-than-expected labor market could lead the central bank to pause while waiting to see if wage growth and inflation speed up.

"I don't think there's that much cause for concern in the labor market data that would lead to them suspending their plan to cut," Julia Pollak, the chief economist at ZipRecruiter, told Business Insider.

Pollak said the quits rate, the latest reading of which was 2.1% in October, is "consistent with a non-inflationary labor market" and that "wage growth at 4% over the year should be sustainable given current productivity growth." Cory Stahle, an economist at the Indeed Hiring Lab, said the US economy continues to add jobs above population growth and has low unemployment.

The unemployment rate increased from 4.1% to 4.2% in November. The three-month average job gain in November was around 173,000, lower than early 2024 but still strong.

"There are still many reasons to be optimistic about the labor market, but also you don't, as a Federal Reserve policymaker, you don't want to wait until things start looking bad to react to that because by then, you might be too late," Stahle said.

The interest rate outlook for 2025 is a bit more uncertain. President-elect Donald Trump has already posed broad tariff threats on key trading partners with the US, including China, Canada, and Mexico. If he implements those tariffs, consumers would likely face higher prices on impacted goods. The Fed could respond to inflationary trade pressures by once again raising interest rates.

However, Powell has so far declined to comment on any policy changes the Fed would consider in response to Trump's tariff threats, saying during the DealBook conference that too much about what Trump might do with tariffs is unknown.

"We can't really start making policy on that at this time. That is something that lies well into the future. We have to let this play out," Powell said, emphasizing that the Fed is making decisions about what's happening in the economy now and not six months from now.

Still, some economists expect 2025 to be another strong year for the economy. Gregory Daco, the chief economist at EY, said that the US "remains on a solid growth trajectory supported by healthy employment and income growth, robust consumer spending, and strong productivity momentum that is helping tame inflationary pressures."

"We expect these positive dynamics will carry into 2025 allowing the Fed to pursue gradual, but cautious, policy recalibration," Daco said in written commentary.

• Donald Trump's latest tariff threat is to levy 100% duties on goods from the nine BRICS countries.
• He framed the threat as a bargaining chip, warning BRICS against competing with the US dollar.
• The US imported billions of dollars of goods from BRICS in 2023, including apparel and electronics.

President-elect Donald Trump's latest trade threat on nine countries could affect key US imports, risking price increases if the tariffs are implemented.

In a Saturday post on Truth Social, Trump targeted the BRICS group, which comprises nine countries: Brazil, Russia, India, China, South Africa, Ethiopia, Egypt, Iran, and the United Arab Emirates. All have pushed to curb the global dominance of the US dollar. He wrote that he would impose a 100% tariff on those countries' goods unless they committed to not creating another currency that competes with the dollar.

"There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America," Trump wrote.

Business Insider looked at the top goods the US imports from BRICS nations, including medicine, apparel, and electronics. While Trump appears to be using the tariff threats as a negotiating tool and could choose not to implement them at the scale he's proposing, the top imports from the targeted countries could see prices increase even with smaller tariffs.

Census Bureau trade data showed that in 2023, the BRICS nations together accounted for about $578 billion in US imports. China was responsible for the lion's share of that trade, with about $427 billion.

In 2023, the US imported $66.7 billion in cellphones and other household goods from China, $37.4 billion in computers, and $32 billion in toys, games, and sporting goods.

The US imported $151 billion in goods from the remaining eight BRICS nations, including over $11 billion in pharmaceutical preparations, followed by nearly $9 billion in gem diamonds, $6.3 billion in crude oil, and $6.1 billion in cotton apparel and household goods. India accounted for much of the imports from BRICS nations other than China.

Trump is targeting this group because some BRICS leaders have previously suggested acting to reduce their countries' reliance on the US dollar. Last year, Brazilian President Luiz Inácio Lula da Silva proposed creating a common currency among the BRICS nations.

The tariff threat on BRICS came just days after Trump said he would impose a 25% tariff on imports from Mexico and Canada that would remain in effect "until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!" He also warned of a 10% tariff on imports from China on top of any additional tariffs put in place on the country.

Russia has already responded to Trump's tariff threat. The Kremlin spokesperson Dmitry Peskov told reporters on Monday that if the US used "economic force to compel countries to use the dollar," it would empower countries to shift to other currencies for international trade.

Some companies, including Walmart and Columbia Sportswear, have already said they are preparing to increase prices should Trump implement tariffs on key trading partners.

The Trump team did not immediately respond to a request for comment on the impact of Trump's tariff threats on prices. Trump has previously said tariffs will not hurt Americans, misleadingly calling them "a tax on another country" (tariffs imposed by the US are paid by US importers).

During Trump's first term, he threatened tariffs against Mexico as a response to illegal immigration over the southern US border but later withdrew the plan. Sen. Bill Hagerty told NBC News on Sunday that trade had long been used as a "strategic tool," and he said he supported Trump using tariffs as leverage to achieve his priorities.

"We need to take a very hard look at countries that don't have our best interests at heart, countries that are allowing our borders to be violated," Hagerty said, "and use those tariffs as a tool to achieve our ends."

• President-elect Donald Trump is expanding his plans for tariffs on Mexico, China, and Canada.
• The US imports key goods from them that may increase in price, like electronics, oil, and gas.
• Trump's tariff plans could face legal issues, and he may choose not to implement them.

President-elect Donald Trump's newly expanded proposal to increase tariffs on the US's three largest trading partners could raise prices on various goods Americans rely on.

Business Insider looked at what the US imports the most from Mexico, Canada, and China to determine the products most likely to increase in price if Trump's plans come to pass.

The biggest categories are oil, electronics, and vehicles.

On Monday night, Trump posted on his Truth Social platform that on his first day in office, he would "sign all necessary documents" to impose a 25% tariff on goods imported from Mexico and Canada. He also threatened a 10% tariff on imports from China "above any additional" tariffs on that country.

While the feasibility and legality of Trump's proposal are still unknown, if implemented, the proposed tariffs could affect a wide variety of goods Americans use daily. The Census Bureau reported that in 2023, the US imported about $1.3 trillion in goods from China, Mexico, and Canada combined.

From Canada, the top 2023 imports included over $92 billion worth of crude oil, about $34 billion in passenger cars, and almost $9 billion in natural gas.

The US imported over $65 billion worth of car parts from Mexico in 2023, along with about $26 billion in computers, nearly $20 billion in crude oil, and almost $14 billion in medicinal equipment.

China, meanwhile, is a major supplier of electronics to the US. The census data showed that in 2023, the US imported nearly $67 billion in cellphones and other household goods from China, over $37 billion in computers, and more than $32 billion in games, toys, and sporting goods.

Some companies have already been preparing to increase prices as a result of Trump's tariff plans on the campaign trail. Walmart CFO John David Rainey told CNBC on November 19 that price hikes are likely on the horizon if Trump implements his tariffs: "We never want to raise prices. Our model is everyday low prices. But there probably will be cases where prices will go up for consumers."

This is the most detailed tariff plan Trump has released to date. On the campaign trail, he did not detail tariffs on Canada and Mexico — he proposed a 60% tariff on all imports from China, along with a 10% to 20% tariff on goods imported from anywhere else.

Trump appears to be using this round of tariff threats to push for changes in migration and drug policy in the targeted nations. "This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!" Trump wrote of the Mexico and Canada tariffs.

Some political leaders in Canada responded to Trump's threat on Monday night. François Legault, the premier of Quebec, wrote in a post on X that Trump's plan posed a huge risk to Quebec's and Canada's economies. Per a translation from X, he added: "We must do everything possible to avoid 25% tariffs on all products exported to the United States."

Additionally, Trump's plan could spark legal issues. Arturo Sarukhán, a former Mexican ambassador to the US, wrote in a post on X that the tariffs would violate the US-Mexico-Canada agreement, a free-trade agreement negotiated by Trump in his first term that went into effect in July 2020.

Companies and economists have said that Trump's tariff plans would increase consumer prices. BI previously reported that Trump's broad tariff proposals were likely to increase prices across the board, from clothes and footwear to computers and video games.

Trump has denied that would be the case. "I am going to put tariffs on other countries coming into our country, and that has nothing to do with taxes to us. That is a tax on another country," Trump said in an August speech.

The tariffs implemented during Trump's first term did not significantly influence inflation, but his proposals for his second term are much broader and could have a larger impact on prices if implemented.

At this point, however, Trump's proposals could still change. During his first term in 2019, Trump announced new tariffs on Mexico with the aim of strengthening the border, but following criticism from lawmakers — including some Republicans — he withdrew the plan.