Yellen’s Warnings on Tariffs
During a speech at the Council on Foreign Relations in New York City, Treasury Secretary Janet Yellen expressed her concerns regarding proposals for sweeping tariffs, describing them as “deeply misguided.” Yellen emphasized that such measures would not only increase inflation but also adversely affect American businesses. Her remarks come as economic concerns loom large ahead of the upcoming election, with former President Donald Trump advocating for significant tariff increases as part of his economic agenda. Vice President Kamala Harris has also warned that these tariffs would lead to higher prices for American families, labeling it a “Trump tax.”
Janet Yellen refrained from naming Trump directly but critiqued the notion of imposing broad tariffs that isolate the U.S. from both allies and competitors. She argued against a “go it alone” strategy in international relations, stating, “Calls for walling America off with high tariffs on friends and competitors alike are deeply misguided.” She warned that such tariffs would burden American families with increased prices and hinder the competitiveness of U.S. businesses. Yellen also noted that uncoordinated tariffs would compromise America’s ability to tackle pressing global challenges, such as the ongoing conflict in Ukraine and issues like climate change and pandemic preparedness.
Defending Biden’s Tariff Strategy
In a subsequent question-and-answer session, Yellen defended the Biden administration’s decision to retain tariffs imposed during the Trump administration on Chinese goods. She explained that the primary rationale for maintaining these tariffs was to pressure China into addressing unfair trade practices, which were highlighted in the Section 301 action against Chinese imports. “Until China makes a meaningful attempt to respond to the 301 unfair trade practices, President Biden felt we should not reward China by lowering the tariffs,” she asserted.
Trump’s administration had implemented sweeping tariffs on approximately $300 billion worth of Chinese products. The Biden administration has not only kept these tariffs intact but has also expanded upon them in certain instances. Trump, if re-elected, has proposed imposing tariffs as high as 20% on all foreign imports, along with a staggering 60% tariff on Chinese goods and a “100% tariff” on countries moving away from the U.S. dollar.
Fiscal Responsibility and Republican Tax Proposals
In her remarks, Janet Yellen also addressed Republican proposals to extend Trump-era tax cuts, directly critiquing the fiscal responsibility associated with such measures. While acknowledging her constraints under the Hatch Act, she pointed to a Congressional Budget Office estimate that extending tax cuts would add $5 trillion to the federal deficit over the next decade. “Unless that’s paid for in some way, that’s something that we just can’t afford,” she stressed, highlighting the importance of a sustainable fiscal policy.
Overall, Janet Yellen’s comments reflect a growing concern among policymakers regarding the implications of aggressive tariff policies on the economy. As the election approaches, her warnings resonate with the ongoing debate about the best strategies to address economic challenges, especially in light of rising inflation and global supply chain issues.
