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In a statement released Thursday, former US Treasury Secretary Janet Yellen asserted that US President Donald Trump’s imposition of tariffs would have a “tremendously adverse” impact on the American economy. Yellen’s remarks highlight growing concerns among economists regarding the potential consequences of protectionist trade policies. These concerns are amplified by recent economic data suggesting a slowdown in global growth and increased market volatility.
Additional comments
Yellen further elaborated that these tariffs ‘hobble’ companies that are reliant on the supply of critical minerals originating from China. This dependence creates vulnerabilities within the US manufacturing sector, particularly in industries requiring specialized materials.
She noted that approximately 40% of goods imported into the United States are, in fact, inputs for domestic production processes. This statistic underscores the intricate nature of global supply chains and the potential for tariffs to disrupt manufacturing and raise costs for American businesses and consumers. Economists have warned that these increased costs could lead to inflationary pressures and reduced competitiveness.
Yellen also expressed concern that the odds of a recession have increased as a direct result of these trade policies. The uncertainty created by tariffs can discourage investment and hiring, leading to a contraction in economic activity. Market analysts are closely monitoring key economic indicators, such as GDP growth, inflation, and unemployment, for signs of a potential downturn.
The former Treasury Secretary specifically pointed out that tariffs could be particularly problematic for the US clean energy sector, a sector viewed as crucial for future economic growth and environmental sustainability. The imposition of tariffs on imported components and materials could significantly hinder the development and deployment of clean energy technologies.
“We are highly dependent on China for most of the critical minerals that go into the clean energy technologies,” Yellen stated, emphasizing the strategic importance of securing reliable access to these resources. This reliance raises concerns about the potential for supply disruptions and price volatility, which could undermine the competitiveness of the US clean energy industry. The current administration is reportedly exploring alternative sources for these minerals and considering policies to incentivize domestic production.
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