Welcome remarks for the Outlook for North American Trade and Immigration conference

It is my pleasure to welcome you to this conference on the outlook for North American trade and immigration, which the Dallas Fed is hosting in collaboration with the Peterson Institute for International Economics.

Today’s conversation comes at a pivotal time as the new governments both here in the United States and in Mexico adjust trade, immigration and other policies. These policies will affect the national and global economies, international relations and communities throughout the district the Dallas Fed serves. The goal of today’s conference is to discuss economic relationships across the U.S., Mexico and North America and bring forth perspectives that can help inform the public about these timely issues.

The Dallas Fed values the opportunity to hear from and engage with people from an assortment of backgrounds including subject matter experts, business leaders, community leaders and more. By bringing multidisciplinary views together, we deepen our collective understanding of these quickly evolving topics. Let me note that the views I share are mine and not necessarily those of my Federal Open Market Committee colleagues.

Given our close proximity to Mexico, the Dallas Fed has the unique opportunity to engage in collaborative research, analysis and conversations on cross-border issues. Our long-standing relationships with our neighbors in Mexico help us to effectively gather insights on the ground and engage in conversations that inform and guide research and analysis. These interactions enhance our understanding of the U.S.–Mexico relationship and allow us to better serve the public, and these conversations allow us to hear how policy changes transmit into daily life.

Last year, the Dallas Fed launched the Global Institute. The institute builds on the foundation of our previous Center for Latin American Economics, which played a pivotal role in enhancing public understanding of economic policy in Latin America, and of the Globalization and Monetary Policy Institute, which examined how economic integration affected monetary policy. With the Global Institute, we plan to grow the Dallas Fed’s concentration and influence in the field of international economic research and to be a center of policy-related research on global trade, international capital flows and migration, with a particular interest in linkages with Mexico.

One way we accomplish this is by collaborating with leading economists in the field and organizations such as the Peterson Institute to produce impactful research and provide timely insights on the U.S.–Mexico relationship and broader global contexts. I encourage you to visit the Global Institute web site, where you can read our research on migration patterns, the pass-through of trade costs to consumer prices and more.

Changes in trade and other policies will have substantial effects on the U.S. and global economies. Financial market prices have been volatile as market participants digest those implications, as well as uncertainties about the specifics of policies and about how policies will work their way through the economy.

Regarding the economic outlook, higher-than-expected tariffs would very likely raise both unemployment and inflation. The persistence of the effect on inflation would depend on how quickly companies pass through cost increases and whether long-term inflation expectations remain well anchored. A sustained burst of inflation could lead households and businesses to expect further price increases, especially following the persistently elevated inflation in recent years.

As mandated by Congress, the FOMC pursues both maximum employment and price stability. Both of those objectives benefit American families, businesses and communities, and missing on either dimension is costly. History teaches that when higher inflation expectations become entrenched, the road back to price stability is longer, the labor market is weaker and the economic scars are deeper. To sustainably achieve both of our dual-mandate goals, it will be important to keep any tariff-related price increases from fostering more persistent inflation. For now, I believe the stance of monetary policy is well positioned.

I look forward to robust discussions today that can deepen our collective understanding of the U.S.–Mexico relationship, the North American economy and the implications of recent policy changes. And I look forward to continuing this conversation in the fall when we hold the second installment of this dialogue in Washington.

Thank you all for joining us here today. We are especially pleased to have community and business leaders here with us, and we look forward to hearing from you about how trade and immigration policies directly affect your companies, organizations and communities.

Now, I’d like to introduce Marcus Noland, executive vice president and director of studies for the Peterson Institute. Marcus has been associated with the Peterson Institute since 1985 and served as deputy director from 2009 to 2012. He is currently a senior fellow at the East-West Center, and he was previously a senior economist at the Council of Economic Advisers. He has held research and teaching positions at universities including Yale, Johns Hopkins and the University of Southern California. Marcus, thank you for joining us. And thank you to the Peterson Institute for partnering with us to develop today’s conference.