Ex-Treasury official warns Trump’s strategy will 'slow the economy'

28 July

U.S. President Donald Trump speaks prior to signing "phase one" of the U.S.-China trade agreement in the East Room of the White House in Washington, U.S., January 15, 2020. REUTERS/Kevin Lamarque/File Photo

Aaron Klein, former Deputy Assistant Secretary at the U.S. Treasury Department and now a senior fellow at the Brookings Institution, strongly criticized President Donald Trump’s tariff strategy during a CNN interview on Monday.

Discussing the administration’s approach with tariffs, Klein stated that “Trump is reprising his playbook, which is to promise massive tariffs and then cut a deal so that there tariffs are just not as large as he had threatened.”

He warned that this pattern has become repetitive. "We've seen this playbook over and over and over again. He's just reprising the same thing. American consumers are going to pay more. If you like European cars, if you like French wine, cosmetics, you're going to be paying more for a lot of these goods. The European Union is our largest trading partner, and Trump just raised prices on everything that comes from them."

Klein further addressed Trump’s optimistic rhetoric about a future economic boom under his plans. “I know Trump always promises a golden age that once you get everything of his in place, there's just going to be this beautiful, magical golden age. And then something happens. And it's not his fault. And he moves on to the next area.”

He cited the Budget Lab at Yale, which projects that “all of Trump's tariffs writ large will slow the economy by about a half a percent this year.”

When asked about Commerce Secretary Howard Lutnick's statement that broad tariffs would go into effect on August 1, Klein remained skeptical. He noted the administration’s tendency to delay and renegotiate: “These threats of draconian tariffs. 'Trump Always Chickens Out' has become a meme and a trading thing. And in Wall Street. I don't think we're going to see the world turned upside down on on August 1st.”

Klein acknowledged ongoing trade talks with the United Kingdom, predicting a 10 percent tariff deal lower than for the EU, and cautioned about the implications for sovereignty within the EU.

“I don't think the administration has really thought through what it means when you agree with the European Union as a bloc and each individual European country has lost sovereignty to make their own deal. You've seen the French be more upset about this deal than other people within the European Union," he said.

He contextualized the tariffs in light of tax cuts enacted by the administration. “The American public just wrote the biggest check for debt in our history with the passage of his giant bill, which was a massive tax cut and will run up the deficit. These tariffs will bring some money into our coffers. They'll be paid by American consumers as a tax on higher prices for those who buy or need imported goods."

Klien continued: "And that will offset some of the revenue loss with the massive tax cuts that just went through. But nobody's getting any checks in the mail. And if you do, just know that's being funded by a bond being put out, that your grandkids are gonna have to repay, with interest."

Watch the video below or at this link.

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