Former Treasury Secretary Janet Yellen placed emphasis on the Trump administration's trade war on Friday evening, blowing up the latest rollout of import taxes on almost every trading partner of President Trump.
“This is the worst self-harm scar I've ever seen in my career given to our economy,” she told CNN's Anderson Cooper in an interview. “Trump's tariff plans are causing great damage to our economy.”
“In the stock market, we see that the impact of these tariffs is expected to be on American households,” she added.
When asked how Wall Street and the economy could recover in the unstable markets caused by Trump's tariffs, which have won a 90-day hold in negotiations, except for China, Yellen was not optimistic. She specifically pointed out the growing anxiety around bonds, as an example.
“Well, I think it will take a long time to rebuild. Dollar assets have long been considered the safest in the world, especially the US Treasury bonds and bills,” Yellen saw a sharp increase in what he saw this week. Preliminary explanation. “They form the core of the global financial system as a whole.”
“And what we saw this week was a sharp increase. One of the biggest increases in the long-term Treasury yields over a week – almost 50 basis points. At the same time, the dollar's value declined,” she added.
The Biden-era Treasury chief called it an “unusual pattern,” saying, “In a chaotic era, the Treasury usually comes down. Treasury debts are safe shelters. People buy them. That's not what's happening now.”
Her comments come more than a week after the Trump administration imposed a 10% baseline tariff on almost all foreign imports. The president also slapped dozens of countries with higher mutual taxes, but most of them fall under a three-month grace period.
We and Chinese officials have been embracing the world's two biggest economies engaged in their own tariff wars over the last few days. Trump has increased Beijing's obligations to 125%, in addition to the existing 20% tariffs on imports. China responded in physical form, but said it would be a 125 mutual tax cap.
Mutual tariffs have no impact on Mexico or Canada. Mexico and Canada face 25% import tax on goods that are neither based on the 2020 trade agreement.
The growing concern over global trade and the impact of tariffs on consumer prices and inflation are poses a risk of a recession, experts warn. Earlier this month, Federal Reserve Chairman Jerome Powell suggested that the economic harm from import taxes is greater than expected.
The Fed's chief and his colleagues have been warning for months that additional tariffs will be difficult for the central bank to cut interest rates despite pressure from Trump.
Cooper on Friday asked Yellen what would happen if the administration changes anger to the Federal Reserve or Powell about his decision to maintain stable fees amidst uncertainty.
“Well, it's well understood that countries with independent central banks are performing better economically, and there's a very good reason for this: independent central banks are not driven by politics,” she told the CNN host.
“When these central banks are being promoted politically, they tend to do things that are becoming economically unstable,” Yellen added.
