Larry Summers has denounced the Treasury Department of Scott Bescent for alleging that Chinese producers are claiming they are holding the brunt of President Trump's tariffs.
Summers, who served as Treasury Secretary under President Bill Clinton and director of the National Economic Council under President Barack Obama, has had problems with Bescent, who said prices would not surge to US consumers.
Bessent continues to argue that Chinese producers will bear the costs of new tariffs. This position contradicts all introductory economics textbooks and courses I know.” Summers wrote in X's post on sunday.
“What are the arguments and authority for claims that look like Skidic?” he continued.
Summers said iron prices are already beginning to rise as manufacturers, for example, expect tariff effects.
“Best theory contradicts the observation that US steel prices have risen by about a third in two months after adding hundreds of dollars to new cars' prices from inauguration,” he writes.
According to the CRU Steel Sheet Monitor, hot-rolled coil steel prices reached $1,044 per metric tonne last week.
Summers also argued that if Bessent's theory is correct and that the price does not affect consumers of Chinese-made products, “there will be little incentive for consumers to move away from Chinese producers.”
White House officials told the Post in a statement.
“We are leveraging Chinese producers, which is why we raised billions of people's revenues from Chinese tariffs during President Trump's first term without causing systemic inflation,” the official continued.
Trump's tariffs are more widespread than his first-term tariffs, including his collection in China and tax proposals on Canada and Mexico and mutual tariffs, as the global economy is still recovering from the prolonged impact of the pandemic.
The Treasury did not immediately respond to a post office request for comment.
Trump imposed a 25% tariff on steel and aluminum imports in March. However, by late February prices had already increased by 20%, as manufacturers feared the impact of potential prices.
Trump's tough 20% collection on China – and his 25% tariffs in Canada and Mexico during the 30-day suspension ending April 2, shocked investors as economists warned that taxes could reheat inflation.
The market has erased its post-election profits, and the “magnificent 7” tech stocks suffered a huge loss this year.
But Bescent told Fox News earlier this month, “I'm sure Chinese manufacturers will eat tariffs — prices won't rise.”
“I think in Canada and Mexico we are in the middle of a transition,” he added.
Later that week he opposed the idea that Trump's tariffs would continue to promote inflation.
“Customer duties are price adjustments at once.” Bessent told CNBC's “Squawk Box.”
Meanwhile, Wall Street came to life on Monday after signalling that the Trump administration might take a narrower approach to impose tariffs.
According to the Bloomberg and the Wall Street Journal, the president is likely to exclude a set of sector-specific tariffs while applying what he calls “liberation day” on April 2.
“I might take a break from many countries,” Trump told reporters on Monday in his oval office.
But he also said on Monday that he would announce it at very near future tariffs on automobiles, aluminum and pharmaceuticals.
