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‘Revolution’: Fed Chair Kevin Warsh says US likely ‘big winner’ in AI race

Businessman typing on laptop computer keyboard at desk in office. (tadamichi/Getty Images)

(NEW YORK) — Federal Reserve Chair Kevin Warsh on Wednesday voiced optimism about artificial intelligence, describing the technology as a “paradigm shift” that would likely make the United States a “big winner in the medium-term.”

“We are in the first or second inning of this revolution,” Warsh said in Sintra, Portugal, at a conference organized by the European Central Bank.

Warsh, who took the helm of the Fed last month, weighed in on the bullish side of an ongoing debate among policymakers, investors and the general public about the potential impact of AI on the labor market and wider economy.

The technology could create jobs and boost productivity, strengthening the economy of the U.S. and other nations, according to Warsh.

“This is a big paradigm shift both for the conduct of our policy and for our economies,” Warsh said. “I think the jobs will be greater. Prosperity will be stronger.”

Business investment in AI has helped drive recent U.S. economic growth, some studies show.

A surge of AI spending accounted for roughly two-thirds of gross domestic product growth over the first half of 2025, JPMorgan Asset Management found, outpacing the contribution made by hundreds of millions of U.S. consumers. Many of the nation’s largest companies have poured funds into the chips and data centers necessary to operate AI.

AI chipmakers, meanwhile, have helped deliver stock market gains this year, allowing the major indexes to overcome a lackluster stretch for many of the tech giants that previously lifted markets.

Shares of fast-rising AI chipmakers have boosted major indexes. Micron has soared 265% in value this year. Sandisk has climbed a staggering 750% over that period.

For now, however, AI has failed to achieve gains on a scale near its immense costs, some analysts previously told ABC News. A product like AI would typically generate revenue in the form of sales either direct to consumers or to third-party businesses using the technology to enhance their offerings. AI has faced challenges on both fronts, some analysts said.

Speaking on Wednesday, Warsh signaled that he expects a shift in sentiment among businesses regarding the impact of AI.

“While we might see business surveys that say ‘no big deal,’ my speculation is six months from now the surveys will be saying quite the opposite,” Warsh said.

Copyright © 2026, ABC Audio. All rights reserved.

How Canada’s retaliation could hurt American businesses and consumers

By CNN
(CNN) — Canada has a number of arrows in its quiver as it prepares to retaliate against the United States, and they could land hit American consumers and businesses.Already, Ottawa has vowed to match Washington’s latest tariffs dollar for dollar. But Canada also has other tools at its disposal, including restrictions on key exports to the United States.Here’s what Canada could do next — and what each move could mean for Americans.The first move: tariffsCanada’s first move in the brewing trade war is likely to be a straightforward eye-for-an-eye response.Retaliatory tariffs “will be concentrated in sectors such as steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics,” Prime Minister Mark Carney said over the weekend, adding that more details would be shared “in the coming days.”With the exception of steel, all of those industries are also covered by President Donald Trump’s new tariffs. Canada is an important market for US exporters in those sectors: Last year, it ranked as either the largest or second-largest destination for American exports across most of those industries, according to US trade data.Carney also said Canada is considering tariffs aimed at industries Trump has already targeted with separate duties, including cars, steel, aluminum, lumber and copper.The risk for Americans here is that steep Canadian tariffs could weaken demand for these goods, which could force employers to cut workers’ hours or, in some cases, resort to layoffs.The bigger weaponsTrump already signaled he may go beyond the latest tariffs in his trade fight with Canada, threatening on Monday to double tariffs on Canadian cars and auto parts to 50% starting January 1.If Trump follows through — or escalates in other ways — Ottawa could use other ammunition.Canada could restrict key exports to the US, such as energy and a key fertilizer ingredient known as potash, said Diamond Isinger, a policy strategist and former special advisor on Canada-US relations to Prime Minister Justin Trudeau.Another vulnerable area is electricity. Ford said in an interview published Monday that Canada should be prepared to cut off electricity exports to the United States if the trade war worsens, putting a potentially powerful weapon on the table. Ontario supplies electricity to several US states, including New York, Michigan and Minnesota.Carney echoed Ford on Monday, telling reporters that “nothing is off the table.”Any such moves could add to the price pressures Americans have faced this year. Altogether the cost of living is up 3.4% from a year ago, according to July Consumer Price Index data. Gas prices, up almost 25% compared to last year, have weighed heavily on consumers’ finances. The cost of powering homes is also up, with electricity and piped gas both costing around 4% more annually.How badly will it hurt?Tariffs could make it harder for US companies to sell their goods in Canada.Restrictions on energy, electricity or critical minerals, something Ford also floated, could instead raise costs for American companies and consumers by making key inputs more expensive or harder to obtain.For instance, last year, Ontario briefly applied a 25% surcharge on electricity imports to the United States. The Ontario government estimated at the time that it would affect 1.5 million American homes, costing up to $400,000 CAD (around $280,000 USD) “every day the surcharge remains in place.”Restrictions on these key Canadian goods could quickly be felt by US businesses and consumers, making it harder to stay afloat, Isinger said.The-CNN-Wire™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
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