Yellen: 40% of U.S. imports are used for domestic production, and Trump's tariffs will have "extremely adverse" effects
Yellen warned that Trump's tariff policy would have "extremely adverse" effects on the U.S. economy and could lead to a recession. She pointed out that about 40% of U.S. imports are used for domestic production, and the surge in imports has led to a contraction in GDP. Yellen specifically mentioned that these tariffs could severely impact the U.S. clean energy industry and affect the supply of critical minerals. She emphasized that investors should be cautious, as Trump's tariff policy could undermine the U.S.'s competitiveness in the clean energy sector
Former Treasury Secretary and Federal Reserve Chair Janet Yellen issued a stern warning, stating that the extensive tariff policies implemented by the Trump administration would have "extremely adverse" effects on the U.S. economy and could potentially lead the country into recession.
According to the Financial Times, Yellen stated: "[Tariff strategy] will have extremely adverse consequences for the U.S., consumers, and the competitiveness of businesses that rely on imported inputs." She pointed out that about 40% of U.S. imports are used as inputs for domestic production.
Yellen added, "I cannot yet be certain that a recession will occur, but the likelihood of a recession has risen significantly."
Surge in Imports Leads to GDP Contraction, Economic Outlook Deteriorates
Yellen's warning comes as data released this week shows that a surge in imports, driven by businesses eager to stockpile goods, has pushed first-quarter GDP into contraction territory.
Despite the overall spending and production of the $29 trillion U.S. economy remaining strong, surveys released in recent weeks indicate a noticeable deterioration in consumer and business confidence.
Trump announced high "reciprocal" tariffs on multiple countries on April 2, triggering severe market turmoil.
Key Minerals Depend on Overseas Supply, U.S. Clean Energy Sector Faces Severe Blow
Yellen previously joined the advisory board of the private equity firm Angeleno Group, which focuses on low-carbon technologies. She stated that these tariffs could be particularly problematic for the U.S. clean energy sector.
"We are heavily reliant on Asia for most of the critical minerals used in clean energy technologies, batteries, and other products," she said. "Imposing hefty tariffs on these products, I believe, could make an industry that had opportunities struggle."
Yellen stated, "When you decide to support solar panel manufacturing, you must be very careful not to impose higher tariffs on the raw materials needed to produce these products."
This warning is particularly important for investors, as the transition to clean energy has become a global investment theme, and Trump's tariff policies could undermine the U.S.'s competitiveness in this field and lead to significant declines in the value of related companies.
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