Janet Yellen Cautions Trump Tariffs Will Have Far-Reaching Consequences On US, Says Recession Odds Have Gone Up

The former Treasury Secretary also noted that the tariffs could pose a challenge to the U.S. clean energy sector.

Former Treasury Secretary Janet Yellen reportedly stated that the Trump administration’s tariff policies will have far-reaching consequences on the U.S. economy, significantly raising the odds of a recession.

“[The tariff strategy] will have tremendously adverse consequences for the United States, for consumers, for the competitiveness of firms that rely on imported inputs,” Yellen told the Financial Times.

“I’m not yet ready to say that I’m forecasting a recession, but certainly the odds have gone way up,” she said.

Yellen’s comments come at a time when the U.S. first-quarter (Q1) GDP contracted 0.3%, marking the first quarter of negative growth since Q1 2022.

The Bureau of Economic Analysis stated that the decrease in Q1 real GDP primarily reflected an increase in imports and a reduction in government spending. This was partly offset by increases in investment, consumer spending, and exports.

President Donald Trump  blamed the Biden administration while defending his tariff policies, stating that companies are relocating to the U.S. in record numbers.

“This is Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th,” he wrote on his Truth Social account.

The former Treasury Secretary also noted that the tariffs could be problematic for the U.S. clean energy sector.

“We’re highly dependent on China for most of the critical minerals that go into clean energy technologies, batteries, and the like,” she stated. “And by putting enormous tariffs on them, I think we potentially hobble industries that could have a chance.”

Yellen pointed out that she was supportive of very limited tariffs, which leave some breathing space for firms like solar cell manufacturers, enabling them to scale up.

“But when you’ve decided you want to support, say, solar cell manufacturing, you have to be extremely careful not to put yet larger tariffs on the inputs that go into this,” she stated, as per the report.

Meanwhile, U.S. markets were set for a positive start on Thursday, aided by strong tech earnings. The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500, traded 1.04% higher in Thursday’s pre-market session, while the Invesco QQQ Trust, Series 1 (QQQ), which tracks the Nasdaq Composite, was up 1.66%.

For updates and corrections, email newsroom[at]stocktwits[dot]com.<