Federal Reserve Chairman Jerome H. Powell, eyeing the potential for President Trump’s trade war to inflict damage on the United States economy, said that the central bank is prepared to act to sustain the economic expansion if needed.

“We do not know how or when these issues will be resolved,” Mr. Powell said of ongoing trade disputes between the United States, Mexico, China and other nations. “We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.”

Mr. Powell did not explicitly say that the Fed will cut interest rates but his comments send a signal that the central bank is watching Mr. Trump’s trade wars warily, ready to fend off any economic damage.

“He’s making a point to say to the markets that, ‘We can act if necessary,’” said John Briggs, a bond market strategist at NatWest Markets in Stamford, Conn. “I think the markets are taking some comfort, at least, by the idea that he’s moving in the right direction.”

While the Fed has been closely monitoring Mr. Trump’s trade dispute with China, Europe and other governments, Mr. Powell’s comments were his first since the president said that he would escalate his dispute by imposing tariffs on all Mexican goods.

Mr. Trump, speaking in London on Tuesday, said he was ready to punish Mexico with tariffs next week for failing to curb the flow of migrants across the Southern border.

“I think it’s more likely that the tariffs go on, and we’ll probably be talking during the time that the tariffs are on, and they’re going to be paid,” Mr. Trump said.

The decision to impose tariffs of up to 25 percent on Mexico — combined with growing concern over a prolonged trade war with China — has sent markets tumbling. They have gyrated as investors, bond markets and Wall Street analysts grow increasingly alarmed by the potential slowdown in growth that could result from expanded tariffs. The worsening outlook for trade over the last month has been accompanied by signs of weakness in global markets. Prices of key industrial commodities such as crude oil and iron ore have slipped.

After hitting a high on April 30, the S&P 500 was down nearly 7 percent through the close of trading on Monday. Yields on safe government bonds have tumbled worldwide, in a sign that investors see a weakening outlook for inflation and economic growth. And yields on some long-term Treasury securities are now below those of short-term bills, an unusual occurrence known as an “inversion of the yield curve,” which, in the past, has heralded recession.