'Worried' Moody’s economist predicts Trump’s economic policies will 'do a lot of damage'
U.S. President Donald Trump speaks in the Oval Office of the White House in Washington, D.C., U.S., February 11, 2025. REUTERS/Kevin Lamarque
President Donald Trump’s economic policies are causing serious problems, an economist said Monday. Mark Zandi, Moody’s Analytics chief economist, told CNN that Americans would see a rise in prices due to tariffs that Trump is planning to impose on China, Mexico and Canada on Tuesday, the Daily Beast reported.
Zandi was responding to comments Treasury Secretary Scott Bessent made over the weekend.
“We have the experience of President Trump’s first term, where the tariffs did not affect prices,” Bessent told CBS News. “And it’s a holistic approach, that there will be tariffs, there will be cuts in regulation, there will be cheaper energy. So I would expect that very quickly we will be down to the Fed’s 2 percent [inflation] target. So I’m expecting inflation to continue dropping over the year.”
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Zandi disagreed with Bessent’s prediction. “I think they’re going to raise prices,” he said. “They’re a tax on American consumers. If you add up all of the tariffs that are now in play, those that have already been imposed—like the 10 percent on China—and those that are being discussed, like the 25 percent on Canadian and Mexican imports… That’ll add about $1,250 to the typical American’s bill over a period of a year.”
This prediction mirrors findings from the Peterson Institute, a nonpartisan research organization, that tariffs would “cost the typical US household over $1,200 a year.” Bessent called these findings “alarmist.”
Zandi said tariffs would first cause “higher inflation” and then “weaker economic growth.”
He added that the tariffs would cause some Americans to lose their jobs. “At some point the tariffs will do economic damage because they’ll cost American jobs,” Zandi said. “Especially if other countries respond and retaliate and raise their own tariffs and impose their own trade restrictions — which is what they did, certainly what China did, back in President Trump’s first term.”
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“Consumer confidence is down,” said CNN host Kate Bolduan. “Consumer spending dropping. Layoffs ticking up. GDP forecast turning negative. Do you see this as a momentary blip, or could this really be the beginning of something bigger?”
“Well, I’m worried,” Zandi said. He added that there is “uncertainty around economic policy.”
He listed factors leading to the uncertainty: tariffs, cuts to the federal government by the Department of Government Efficiency, immigration policy, Congress’ tax cut legislation, a possible government shutdown and Treasury debt.
He added that business and consumers would become more “cautious” with their finances. “It feels like the economy’s gagging on the uncertainty and, you know, the longer the uncertainty hangs around, the more likely the economy’s going to start choking,” he said. “And yeah, I think it’s going to do a lot of damage.”
