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Hear ex-Treasury secretary’s prediction if Trump doesn’t change course

A new report just out.

Out this morning shows more cracks in the U.S. economy, with consumer confidence falling sharply down to its lowest level in more than two years, according to the University of Michigan survey.

Americans are increasingly worried by President Trump's frequently changing economic policies and the threat of tariffs and making products from around the world even more expensive to U.S. consumers.

Here in the United States.

So let's bring in former U.S. Treasury secretary under President Clinton, Larry Summers.

Thank you for coming on.

I first want to get your reaction to this new report.

Are consumers right to be this concerned about the economy?

Yes, they're completely right.

This is like being in the back of a car where the driver is weaving wildly.

 

weave [wiv] v. 迂回行进，穿行

 

You're scared about what's going to come next.

And they're absolutely right.

Given what this could mean for higher prices, given what this could mean for reduced investment, given what this could mean in terms of retaliation from other countries, I think we're only in the second inning of our problems.

Unless the president and his administration make a radical change in course.

How concerned are you, Mr. Secretary, that the U.S. potentially is heading for a recession?

I thought at the beginning of the year before the president was inaugurated that the risks of recession were 10 or 15%.

I now think they're very close to half and rising every year.

So we are taking a very substantial risk of recession.

The best prospect we have for avoiding recession is a change in policy direction, away from random, fluctuating, impositions of tariffs, away from threats to the rule of law in terms of federal spending, away from threats to the rule of law, in terms of the persecution of particular individuals and companies.

If we stay on the current policy path with the current policy approach, I think the odds of recession get to be, very high.

 

imposition [͵ɪmpəˋzɪʃən] n.（税的）征收；施加（惩罚等）

 

I still hope that a combination of a strong judiciary, a Congress that would be able to find its, voice, a clamor from public opinion and market signals will get the administration to change course.

 

clamor [ˋklæmɚ] n. 持续的叫喊，喧闹；吵吵闹闹的要求

 

But if that doesn't happen, we are headed back towards stagflation.

With both recession and rising prices, that will be much more serious than what we are seeing today.

And because of that concern, a lot of Americans are wondering what to do with their money right now.

Should they, you know, they're looking to buy a home.

Should they buy a home?

What should they do?

Stock markets.

They are bouncing back today.

We should note, but it seems it has been a brutal stretch.

 

stretch [strɛtʃ] n. 展开，铺开;延伸

 

Here it is on the screen.

How should Americans who have money in the stock market, for example, say in a retirement account, respond to all of this yet?

Well, it's a scary time and it's a difficult time.

But by and large, the experience is that people who go changing their portfolios all around and changing their stocks all around when they get nervous, end up losing more money than they gain by what they're giving to the pros on the in and out.

So I'd argue that people should set a course for their long term, finances and not try to change it on a day to day basis.

But the course I'd set right now would be a more cautious, less risk taking course than the one I would have set a few months ago, and certainly is a time when people want to make sure that they've got cash for different contingencies, because, that's what could happen.

 

contingency [kənˋtɪndʒənsɪ] n. 意外事故；偶然事件

 

Look, it's a sign of the amount of uncertainty that's being created that amidst everything else, the asset that's done well is gold.

And that's what people do when they don't have confidence in the people who are managing the, the country's currency.

And that is unfortunately, what we're seeing, from, the administration.

I do hope that it will change.

I hope that what's happening in markets will teach a valuable lesson.

There was a CEO survey this week done at Yale that showed probably, if anything, even more anxiety than, consumers are showing perhaps that news, will reach, the administration.

But this is a time when we need to stop driving the car the way we have been driving it, or we will be headed for a serious accident.

Larry Summers, thank you very much for joining us.

Yes.

Thank you so much, Secretary.

CNN's Vanessa Jurkovich with me now.

It has been a very rough week for investors, for those of us who have for one case, for anybody that is in the market.

Yeah.

And look at the markets though right now it's weird.

It starts off like this seemingly.

Okay.

And then by the end of the day you're like, what happened?

Because there's so much news and there's so much news around tariffs and this trade war.

This is almost like a palate cleanser, a breath of fresh air before the trading day really gets going.

 

palate cleanser 味觉清洁剂

 

But what we have seen all week is just a very tumultuous week on Wall Street.

 

tumultuous [tjuˋmʌltʃʊəs] adj. 骚乱的，骚动的；混乱的

 

You can just see, since Donald Trump was inaugurated, just look at that line graph.

It is going down.

We want to obviously see that going up and so does the president.

But the S&P in correction mode also you have the Nasdaq that hit their correction last week.

And the Dow is on pace to have its worst week since June of 2022.

And we are hearing this morning from the Commerce Secretary Howard Ludnick who is forecasting what April 2nd tariffs could look like.

Take a listen.

That would be fair, right?

If you're going to tariff cars from anywhere, it's got to be tariff in cars from everywhere.

That's the whole point.

It's bring it home.

Don't make it so that Japan has an unfair advantage over Korea or Germany or anywhere.

The idea is Donald Trump is focused on fairness.

So these are the reciprocal tariffs that are going to go into effect on April 2nd.

 

reciprocal [rɪˋsɪprək!] adj. 互惠的，对等的

 

And this is what the Commerce Secretary is saying is going to happen.

Any foreign cars that are imported from these three countries that we know of so far are going to be tariffed, they're going to be taxed coming into the US.

Obviously, the U.S. consumers buy a lot of these vehicles.

But the whole reason the president says that he's igniting this trade war is because he wants to get U.S. manufacturers, the big three auto makers, to build here in America and for consumers to buy those cars.

The problem is we do not have the capacity to do that in the United States.

That's why we trade so much with Canada and Mexico.

That's why we import vehicles.

And with tariffs in place and these reciprocal tariffs that will hit on April 2nd, that is going to raise the cost production of a vehicle.

And that ultimately gets passed down to the U.S. consumer.

So while it sounds great to make in America to buy in America, we simply don't have the structure and the infrastructure here in the US to make that happen.

However, markets seem to be doing okay with what he said so far with what Nick said so far.

The day is young.

We will see if we hear any more moves on President Trump's trade policy.

We will see what happens because it's how it closes, not how it opens.

Unnecessary.

Your coverage.

Thank you so much.

I really appreciate it.