America's "high inflation whistleblower" Summers: Tariff policies will have an impact on the economy similar to the oil crisis
Former U.S. Treasury Secretary Summers warned that the tariff policy of the Trump administration will have an impact on the economy similar to that of the oil crisis, weakening production capacity, raising prices, and increasing unemployment. He pointed out that this supply-side shock will pose greater challenges for the Federal Reserve and criticized the negative impact of protectionist policies on competitiveness. Summers also mentioned that the likelihood of the U.S. economy falling into recession is close to 50%
The "high inflation whistleblower" in the United States, former Treasury Secretary Lawrence Summers, recently stated that the tariff policy of the Trump administration will have an impact on the economy similar to that of the oil crisis, weakening U.S. production capacity while driving up prices and increasing unemployment.
In an interview with Bloomberg, Summers stated:
The way we discuss these issues should be similar to how we discuss soaring oil prices, earthquakes, or droughts. This is a typical supply-side shock. The only question is how much damage it will cause.
Regarding Trump's tariff policy, Summers pointed out that these policies will not only have significant economic impacts but also involve diplomatic relations and national security. The direct impact is to raise prices, with subsequent chain effects including reduced employment and decreased investment. This is a classic supply-side shock, which makes the Federal Reserve's situation very difficult.
Summers also cited research on the tariffs imposed during Trump's first term, noting that these policies have almost raised the prices faced by U.S. consumers on a "dollar-for-dollar" basis.
Summers explicitly criticized this protectionism of the Trump administration, stating:
By imposing higher tariffs on steel and aluminum, the U.S. government is raising the prices of key inputs for industries that use these products. You are reducing the competitiveness of producers.
This is not even good mercantilism.
Last month, Summers posted on social media platform X that the likelihood of the U.S. economy falling into recession is now "close to 50/50." This assessment is significantly more pessimistic than his expectations a few months ago. He attributed the rise in this risk to a core issue of "completely counterproductive economic policies," stating that the tariff policy and its uncertainties have a dual negative impact on the economy.
On Wednesday after U.S. stock market hours, according to CCTV News:
On April 2 local time, U.S. President Trump announced at the White House the imposition of so-called "reciprocal tariffs" on trade partners. Trump stated that he would sign an executive order to implement "reciprocal tariffs" on multiple countries.
Trump indicated that the U.S. would calculate all tariffs, non-tariff barriers, and other forms of comprehensive tax rates against countries that pose a significant threat to the U.S. The tariffs will not be completely reciprocal, and the U.S. will charge these countries about half the amount.
Previously, several trade partners had indicated they would take countermeasures in response.
According to CCTV News, on April 2 local time, U.S. President Trump announced a 25% tariff on imported cars. Trump stated that the 25% tariff on cars would take effect on April 3.
Risk Warning and Disclaimer
The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at one's own risk