Yellen: Trump’s tariffs could derail US progress in fighting inflation

US Treasury Secretary Janet Yellen said on Tuesday that US President-elect Donald Trump’s proposals to impose broad tariffs on imports could undermine previous efforts to calm inflation, warning that consumer prices could rise.

Her comments came during the Wall Street Journal’s “Board of Executives” summit, where Trump pledged to impose broad tariffs of at least 10% on all imports, with higher rates on goods from China, Canada and Mexico.

According to CNN, Yellen explained that imposing comprehensive tariffs could “substantially raise prices for American consumers and create pressure on companies that rely on imported goods,” when asked about Trump’s plans.

She warned that this could negatively affect the competitiveness of some sectors and increase costs for American families.

She said, “This is a strategy that I fear could derail the progress we have made in fighting inflation, and could have negative effects on economic growth.”

However, Yellen defended the Biden administration’s efforts to impose targeted tariffs on Chinese goods to counter unfair trade practices by Beijing.

She has previously expressed concern about China’s overcapacity, which threatens to flood global markets with cheap goods that could undermine the development of some key U.S. industries.

Speaking Tuesday, Yellen also expressed regret that the United States has not made more progress in reducing the deficit, saying she believes the deficit “needs to be reduced, especially now that we are in a high-interest environment.”

She also stressed the importance of the Fed’s independence, saying that countries do better economically when central banks are allowed to make their decisions based on their best judgment without political influence.

Trump has said he wants to have “at least” a say in setting the Fed’s interest rate.

“I think interfering with the Fed’s commentary, taking steps to influence its independence, is a mistake,” Yellen said.

“I think that tends to undermine the confidence of financial markets and ultimately the confidence of Americans in an important institution,” she added.

Yellen said she spoke with Trump’s nominee to lead the Treasury Department, hedge fund manager Scott Bessent, congratulating him on his nomination.