The tariffs if sustained could cause inflation to significantly worsen, possibly eroding voters' trust that Trump could as promised lower the prices of groceries, gasoline, housing, autos and other goods.

The 25% tariffs Trump was to impose on Mexico and Canada, joined with a 10% tariff on China, would have pushed up underlying price pressures by as much as 0.8 percentage point, as measured by the central bank’s preferred price pressure gauge, the personal consumption expenditures price index, the Boston Fed paper said.