Trump tariffs are “the worst self-inflicted wound I have ever seen”, ex-U.S. Treasury Secretary, Janet Yellen
CITIZENS COMPASS–Former U.S. Treasury Secretary, Janet Yellen, has described President Trump’s recent trade policy, as “the worst self-inflicted wound that I have ever seen an administration impose on a well-functioning economy.”
In the exclusive interview with CNN’s Bianna Golodryga and Zain Asher, Yellen stated that the likelihood of a U.S. recession has “clearly risen” due to the Trump administration’s policies, explaining that “the U.S. and global economies have suffered a huge protectionist shock.
“Economists calculate that at this point, average tariff levels are now in the 20 to 25% range,” she continued. “So even if the reciprocal tariffs are abandoned, we have the highest average tariff rate since 1934. This is going to raise the costs that households in the United States face.”
She also defended her economic policies under the Biden administration: “we had a very well-functioning economy. And President Trump has taken a wrecking ball to it.”
Key quotes from Yellen
On whether she agrees with the assessment that Trump’s trade policy will do lasting damage
“I completely agree with it. Of course it was a relief that the reciprocal tariffs, that would have affected more than 180 countries, that a pause was placed on those. But still, even if they never go into effect, the US and global economies have suffered a huge protectionist shock. We have enormous, almost prohibitive tariffs on China – which is one of our most important sources of imports – very substantial tariffs still on Canada and Mexico, on the auto sector, and a 10% general tariff that applies to most countries around the world.”
On the impact that Trump’s tariffs will have on US households
“Economists calculate that at this point, average tariff levels are now in the 20 to 25% range – at the beginning of the Trump administration, they were just over 2%. So even if the reciprocal tariffs are abandoned, we have the highest average tariff rate since 1934. This is going to raise the costs that households in the United States face. One critical estimate that came out this morning estimates a cost to the typical American household of the existing tariffs of about $4,000 – which is enormous. It’ll have a significant impact on the price level and an adverse impact on the United States and on the global economy.”
On her advice to her successor, Scott Bessent
“My advice to my successor and to other senior economic officials is that all of them should be explaining to the president why his policies are so damaging to the American economy and why they will harm American workers and households, as well as people around the world. And economists are really in agreement about this.”
“I don’t know what’s happening inside the Trump administration, but my hope would be that although my successor has been supporting President Trump’s approach, that he’s giving good advice behind closed doors.”
On whether foreign investors have lost faith in the credibility of the US
“I think they’re asking hard questions about the credibility of US policy and what role the US will have going forward in the global economy, whether or not we’ll have predictable economic policy and remain a strong, positive global force.”
On whether she is concerned about Trump’s potential picks for the US Federal Reserve
“I am concerned because I see the Fed as a tremendous source of stability in economic policymaking. The Fed is independent, it prizes its independence, it focuses squarely on carrying out its dual mandate for price stability and maximum employment. And it’s been very predictable, and I believe very thoughtful and sensible in its policy approach. And this really relies on good appointments of all of the officials who serve on the Federal Open Market Committee. I think that [Jerome] Powell has done an excellent job of leading it. And yes certainly in the past, President Trump has attempted to appoint individuals with ideas that are dangerous and certainly not mainstream… And I think, simply, if President Trump were successful in replacing Powell with someone who had very non-mainstream ideas, I would really wonder if that person could successfully chair the committee and produce a coherent monetary policy.”
On how she would respond to the Trump administration’s attacks on her economic policies
“Well I would point out to you that the Economist magazine described the US economy as the envy of the world. President Trump inherited an economy where growth was very strong. The labor market was functioning very well, with low unemployment and an outstanding record of job creation. And inflation, while not yet at the Fed’s 2% goal, was coming meaningfully down… So we had a very well-functioning economy. And President Trump has taken a wrecking ball to it.”
On how she would grade the Trump administration’s handling of the economy so far
“I’m afraid I could not give it a passing grade… This is the worst, self-inflicted wound that I have ever seen an administration impose on a well-functioning economy.”
On the likelihood of a US recessions
“It’s clearly risen. And in addition to the tariffs and the negative likely impact on consumer spending, we have a huge uncertainty shock. No one knows where any of this is going. We’re now in a huge war with China… They’re going to result in massive impacts on the United States and the global economy. No one knows where these policies are headed. President Trump says he wants to create manufacturing jobs – what firm is going under these circumstances, with this level of uncertainty, going to undertake a long-lived investment?”
