"Many district contacts expressed concern about the possible adverse effects of tariffs and other proposed trade restrictions, both domestically and overseas, on future investment activity", according to minutes released Thursday of the Fed's June 12-13 policy meeting in Washington.
"Contacts in some districts indicated that plans for capital spending had been scaled back or postponed as a result of uncertainty over trade policy".
Federal Reserve officials last month said they expect to keep raising interest rates and suggested that by next year, they could be high enough that they could start slowing growth, according to minutes of their discussion released Thursday.
The Trump administration has imposed tariffs on steel and aluminum imports.
"Some participants raised the concern that a prolonged period in which the economy operated beyond potential could give rise to heightened inflationary pressures or to financial imbalances that could lead eventually to a significant economic downturn", the statement said.
While highlighting a strong economy, Fed officials appeared vigilant about emerging risks, especially trade tensions, and the dangers of an economy that might overheat.
United States tariffs take effect, China warns of 'counterattack'
If the trade war heats up, officials might impose further obstacles and target a broader range of goods. The row has caused turbulence on the world's stock markets and could hurt global trade and growth.
Monetary policy remains on course, despite worries about a global trade war, triggered by escalating retaliatory tariffs.
Despite the warnings, the June minutes noted a general strengthening of the United States economy and at its meeting of June 12-13, Fed officials lifted USA interest rates by a quarter point, taking the rate into the 1-75 to 2 percent range following what is the second increase this year.
Despite those risks, "the economy is doing very well", as Chairman Jerome Powell told reporters after the decision. Fed officials also increased their projection for the number of rate hikes they plan to make this year from three to four.
"[Many contacts] expressed concern about the possible adverse effects of tariffs and other proposed trade restrictions, both domestically and overseas, on future investment activity", the text, which was released on Thursday, said.
In the Fed's latest projection, the neutral rate stood at 2.9 percent. At the June meeting, they voted to raise the benchmark rate for a second time this year to a new range of 1.75% to 2%.
The minutes overall gave the impression of a central bank impressed by the US economy's strength and confident in its plans to continue raising rates, but also concerned with what could push the economy off its upward course.
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