U.S. Treasury Secretary Janet Yellen Expresses Concern Over Trump's Tariff Plans

By David Lawder

Date: [Insert Date]

Location: WASHINGTON (Reuters)

U.S. Treasury Secretary Janet Yellen voiced worries regarding President-elect Donald Trump's proposed broad import tariffs, which she believes could disrupt efforts to control inflation and increase costs for businesses and households.

During an event with the Wall Street Journal CEO Council, Yellen emphasized her concern for U.S. fiscal sustainability, urging Congress to identify ways to finance any extensions of Trump’s 2017 individual and small-business tax cuts, set to expire in 2025.

Yellen highlighted that the proposed tariffs, which include a significant 60% on imports from China and 10% to 20% on other foreign goods, would "raise prices significantly for American consumers and create cost pressures" on companies. She warned that these strategies could jeopardize recent progress on inflation and hinder economic growth.

On the subject of U.S. fiscal health, she indicated that extending all the provisions of the 2017 Tax Cuts and Jobs Act could add $5 trillion to the U.S. deficit across the next decade, and she urged Congress to find offsets to avert a debt crisis.

Yellen pointed out that the Biden administration has reported a $1.83 trillion budget deficit for the 2024 fiscal year, marking the largest deficit outside of the COVID-19 period, compounded by debt interest costs exceeding $1 trillion for the first time.

"I am concerned about fiscal sustainability… the deficit needs to be brought down, especially now that we're in an environment of higher interest rates," Yellen stated.

Dedicated Staff

Yellen mentioned her discussions with Trump’s Treasury secretary nominee, Scott Bessent, stressing the department's extensive responsibilities in economic and tax policy, as well as international alliances.

She assured that Treasury staff, particularly civil servants, are analytical, proficient, and operate with high integrity, producing critical analyses beneficial for both the economy and financial markets.

Regarding the Federal Reserve, Yellen reiterated her support for an independent, non-political Fed. She noted that while Trump is entitled to express views on Fed policy, recent Democratic administrations have typically avoided such commentary to preserve its autonomy, which she believes is crucial for maintaining market confidence.

"I think it's a mistake to become involved in commenting on the Fed and certainly taking steps to compromise its independence," she remarked, emphasizing that such actions could erode confidence in essential institutions.