GEOFF BENNETT: Welcome to the "News Hour."

After months of delay and back room dealmaking,# the Trump administrati.. tariffs on nearly 100 countries, sending U.S.# import duties soaring to their highest levels## in nearly a century.

The new rates range# from 10 to 15 percent for Japan, the E.U.,## and the U.K. that negotiated agreements# and as high as 50 percent on nations such## as Brazil and India.

India's tariffs are# scheduled to take effect in three weeks.

Meantime, many countries continue to work behind# the scenes to negotiate more favorable deals.

To help break down the impact of the# new tariffs and interpret some of the## other signs we're seeing across the# economy, we're joined again by Diane## Swonk.

She's chief economist at KPMG.

That's# the global consulting and accounting firm.

Diane, it's always great to see you.

So the Yale Budget Lab ran the numbers# and found that the average effective## tariff rate is now about 18 percent.# That's the highest it's been since 1933.## Put that into perspective for us.

What does# that mean for the U.S. economy overall?

DIANE SWONK, Chief Economist, KPMG: Well,# what's really important is that tariffs tend## to be -- historically, they're a one and done, a# bump-up and a one time increase in price levels.

But this doubling of tariffs, basically# doubling from what we saw in June,## the effective tariff rate, that is not only# going to add to another increase in prices,## which we're only beginning to see the early signs# of right now, but also the tariffs are so large## that they also squeeze profit margins# and that means cost-cutting or layoffs.

And so what we're worried about is a sort# of stagflationary kind of nature of these## tariffs because they're so large and they're# just unable to be completely absorbed by## either firms themselves or completely# passed on to consumers 100 percent.

We're looking for inflation to pick up# to about 3.5 percent by year-end and## then stay elevated a little bit longer# than we initially expected because of## the sequential nature of these tariffs# and the fact that we have had inflation## running above the Fed's target for the# better part of more than four years.

And that's important as well# because it makes the risk of a## more persistent bout of inflation# much higher at the same time that## we're seeing the labor market start to# show some fault lines and stagnating.

GEOFF BENNETT: You wrote today that# tariffs are now fueling inflation,## causing lethargy in the labor market and# further sowing the seeds of uncertainty.## You also said it's possible that we could# be in a recession and not even know it.

What suggests to you that we're# inching our way toward a recession?

DIANE SWONK: Well, we still have# a 40 percent chance of recession.## And we aren't forecasting a full recession yet.

But the key issue is that we're looking at# not -- every recession is different.

However,## we have never seen the share of the# long-term unemployed -- those are## people unemployed more than 27 weeks,# which also their length of unemployment## went up in the month of July.

The share of# the total labor force, that has picked up.

That usually happens after a# recession is already under way.## We saw in 2008 the U.S. economy actually# entered the recession in January of 2008,## even though the global financial crisis# and the realization that we were in a## very severe recession, the Great Recession,# didn't occur until September of that year.

GEOFF BENNETT: So with a stagnating job# market, inflation threatening to heat up,## that really makes a complicated# decision matrix for the Fed.

The## Fed's going to make their decision# about the next rate cut in September.

What are the challenges that they're# facing and what are you forecasting?

DIANE SWONK: Well, it's really a toxic situation# for the Federal Reserve.

They do want to preserve## the economy.

And we have got this very narrow# margin of error in the labor market where,## frankly, 50,000 to 80,000 jobs is all we need# each month to keep the unemployment rate stable.

But that also means that anything lower than that,# which we could get with some of the cuts that are## already in the pipeline, that would be an increase# in the unemployment rate.

So they're talking about## higher inflation and higher unemployment.# That's a very hard situation to be in.

And what we expect is, the Fed will cut two times# by the end of the year in October and December.## So, September is a hard and heavy lift,# given we think the inflation numbers are## going to get worse faster than the# employment numbers initially.

But,## still, this is a very difficult# situation for the Federal Reserve.

GEOFF BENNETT: I want to ask you about# an announcement that President Trump## made late today.

He announced that# he was nominating Stephen Miran to## fill a vacant seat on the Fed's# seven-member Board of Governors.

The president said that Miran would# serve through January of next year## while he continued to search for# a permanent replacement.

What## should we know about him and how does his# presence change the dynamic on the board?

DIANE SWONK: Well, I think it's really# unusual that we're only having sort of## a short-term appointment, which means it# means less for perceptions of the Fed.

And,## obviously, the president wants to# figure out who he thinks will be## best to replace Chairman Powell or who# he favors to replace Chairman Powell.

But this sort of placeholder kind of placement# means that we're not going to be -- the markets,## financial markets will not be watching# as much how this person votes.

I would## expect him to dissent even as the Fed cuts# because the president has made clear that he## does want more cuts than currently the Fed is# even pondering.

And I think that's important.

GEOFF BENNETT: Diane Swonk,# chief economist at KPMG,## thanks again for joining us.

We appreciate it.

DIANE SWONK: Thank you.