Larry Summers: Trump’s tariffs are ‘crazy, dumb’ economic policy
Larry Summers has opposed President Donald Trump on policy before.
But he says the president’s proposed tariffs on steel and aluminum imports are something else entirely.
“This is really crazy, dumb protectionism,” Summers told CNN’s Christiane Amanpour in an interview on Monday.
Summers, a Democrat who led the Treasury Department under President Clinton and served as one of President Obama’s top economic advisers, called the tariffs the “most irrational economic policy that any president has introduced in the last half century.”
On Thursday, Trump said his administration will impose a 25% tariff on steel imports and a 10% tariff on aluminum imports as soon as this week, using a national security justification. It’s not yet clear if there will be an exemption for US allies and trading partners like Canada, Mexico and the European Union.
“Our country, on trade, has been ripped off by virtually every country in the world, whether it’s friend or enemy,” Trump told reporters on Monday.
Summers said this strategy could have major economic consequences.
“There’s real risks that this is going to set off a cycle of escalation and response that could usher in a new major stretch of protectionism,” he said. “In a moment when the global economy seemed like it was coming into the groove, this could be enough to knock it off and out of that groove.”
Summers also questioned why the US would want to penalize its allies in the name of national security.
“The damage that is going to be done to our Canadian allies, our European allies [and] our Brazilian allies is going to do much more to hurt our national security,” he said.
Summers criticized the notion that the tariffs would dramatically hurt China, which Trump has singled out as the enemy of US steel production in the past.
He said that the tariffs would be a “pinprick” to China because “their exports go to places other than the United States.” Indeed, China only ranks as the 11th largest importer of steel to the U.S., well behind Canada and Mexico, according to a Department of Commerce report from December 2017.
“There’s a case for more aggressive trade policies with respect to China, but that is not what this is,” Summers said. “This a hurt-our-allies-first policy.”
Summers said that while he has come out against the Trump administration on numerous issues before, the proposed tariffs are beyond the pale.
“There are other policies that the administration has proposed that I strongly opposed — the tax cuts, for example,” he said. “But those tax cuts … quite likely would have been legislated by a different Republican administration.”
He continued: “I cannot imagine any administration, other than this one, that would have engaged in these tariff policies.”