Larry Summers didn’t hold back. During a pair of interviews with Fortune published April 11, the former treasury secretary in the Clinton administration described President Donald Trump’s latest tariff plan as a “narcissistic conceit,” warning that the U.S. may be headed toward a “self-inflicted” recession.
“I have been exposed to a lot of economic theories in my time,” he said. “I have not been able to relate much of what Bessent and his colleagues are saying to any school of economic thought.”
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Trump’s Tariff Math Raises Eyebrows
Summers took issue with the current scale of the tariffs, saying that despite Trump’s pause on reciprocal tariffs announced on April 9, the U.S. still has “the highest tariffs in 100 years.” He said the new levies are 10 times higher than those during Trump’s first term and could discourage badly needed foreign investment.
Trump said, “We’re making a fortune with tariffs – $2 billion a day” during a National Republican Congressional Committee dinner in Washington on April 8. However, Summers warned that this method of raising funds is economically harmful, saying, “Tariffs are regarded as a terrible source of revenue.”
“They’re regressive, like sales taxes,” he said, emphasizing their outsized impact on lower-income Americans.
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Summers flagged bond market behavior as a red flag. According to PIMCO, protectionist U.S. trade policies have weakened the case for exposure to the U.S. dollar and long-term Treasury bonds, while making foreign bond markets more attractive.
“The fact that when they perceive more risk, people are moving out of instead of into U.S. long-term bonds raises substantial concerns,” he said, adding that this shift could point to a government funding crisis.
Federal Reserve Chair Jerome Powell addressed similar concerns during a press conference on May 7, following the Federal Open Market Committee meeting. He warned that the new tariffs could increase inflation and slow the Fed's progress toward reaching its 2% inflation goal, which might delay interest rate cuts by up to a year.
Summers also challenged the administration’s claim that tariffs would revive U.S. manufacturing. According to the Bureau of Labor Statistics, the U.S. manufacturing sector lost 1,000 jobs in April.
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Treasury Secretary Scott Bessent recently told CNBC, “If we’re successful, tariffs would be a melting ice cube in a way because you’re taking in the revenues as the manufacturing facilities are built in the U.S.” He suggested that they’d initially hurt but eventually spark growth.
Summers dismissed this line of thinking, saying it lacked support from any economic school of thought. “If the tariffs are not permanent, why will any business relocate a long-term facility to the U.S.?” he asked.
"I find the Mar-a-Lago accord a bizarre conceit, a narcissistic conceit, rather than a serious policy approach that other countries might subscribe to,” Summers continued.
Summers ended with a broader warning: “Even a terrific hand can be misplayed—and I’m afraid that’s what’s happened.”
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