WSJ Interview
"US Economy Recovers Fastest Among Advanced Countries"
Janet Yellen, the U.S. Treasury Secretary, warned that the tariff increase policy of President-elect Donald Trump, who will take office in January next year, could lead to rising inflation and a decline in economic growth. While evaluating that the U.S. economy has recovered the strongest and fastest among major advanced countries, she expressed concerns about the high fiscal deficit.
On the 12th (local time), Secretary Yellen said in an interview with the U.S. economic daily The Wall Street Journal (WSJ) that Trump’s tariff pledge "could derail the progress we have made on inflation and result in negative outcomes for growth."
She stated, "Almost all economists agree that broad tariffs would significantly raise U.S. consumer prices and increase cost pressures on companies reliant on raw material imports," adding, "(Tariffs) will negatively affect the competitiveness of parts of the U.S. economy and substantially increase household costs."
Earlier, President-elect Trump pledged during his candidacy to impose a universal tariff of 10-20% on all imports and a 60% tariff on imports from China. At the end of last month, he announced plans to impose a 25% tariff on Mexico and Canada.
However, she also emphasized that tariffs are sometimes necessary to counter China’s overproduction supported by government subsidies.
Secretary Yellen said, "I have repeatedly expressed dissatisfaction with China’s practices of developing overproduction capacity and have discussed this issue with our allies," pointing out, "China can undermine our competitiveness in sectors where we want to play a significant role in the future by dumping goods (selling at low prices) in global markets."
Earlier, the Biden administration imposed high tariffs of up to 100% on steel, aluminum, semiconductors, electric vehicles, and solar products in May, citing China’s overproduction and unfair trade practices.
Regarding this, Secretary Yellen emphasized, "In key sectors like semiconductors, we once held a very large manufacturing share but lost much of it due to subsidies from other countries," adding, "Targeted tariffs on China’s clean energy and semiconductors affect only a very small trade volume of about $18 billion, but they are very important for our future."
She evaluated the economic policy achievements of the Biden administration by stating that the U.S. economy is performing well. She said, "Since the COVID-19 pandemic, the U.S. economy has recovered the fastest and strongest among advanced countries," and "Inflation is now close to the target." She also highlighted that investments are being made in key sectors of the U.S. economy and quality jobs are being created through bipartisan agreements such as the CHIPS and Science Act (CSA) and the Inflation Reduction Act (IRA) passed during the Biden administration.
She expressed concerns about the expansion of the federal government’s fiscal deficit and debt.
Regarding the criticism that the U.S. annual fiscal deficit amounts to 6% of the gross domestic product (GDP), Secretary Yellen said, "I am concerned about the sustainability of the fiscal situation and regret that more progress has not been made," adding, "In a high-interest-rate environment, the interest costs on government bonds increased by hundreds of billions of dollars last year, and the fiscal deficit has expanded further. We need to reduce the deficit."
She also revealed that she had a conversation once with Scott Bessent, the CEO of Key Square Group and a Wall Street hedge fund billionaire, who has been nominated as Treasury Secretary for the second Trump administration.
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