Former U.S. treasury secretary warns Trump’s proposed tariffs could boost inflation

Former U.S. treasury secretary Larry Summers is sounding the alarm on president-elect Donald Trump’s proposed economic policies, warning that they could lead to a surge in inflation in the United States.
During an interview on Rosemary Barton Live, Summers, who previously served in Bill Clinton’s cabinet, discussed the potential repercussions of Trump’s plan to impose a 25 per cent tariff on all imports from Canada and Mexico. According to Summers, such tariffs could result in increased inflation, a scenario that voters are likely to strongly oppose.
Trump recently announced his intention to implement a 25 per cent tariff on all products entering the U.S. from Canada and Mexico starting on January 20, 2025, unless these countries address issues related to drug trafficking and illegal immigration. Additionally, he threatened to impose a 10 per cent tariff on goods coming from China until it addresses the smuggling of fentanyl.
Expressing surprise at Trump’s statements, Summers highlighted the potential negative impact of these tariffs not only on Canada’s economy but also on the global trade landscape. He emphasized that disrupting trade flows could lead to a less efficient global economy.
In 2022, the U.S. imported a substantial amount of goods from Canada, totaling over $600 billion Canadian dollars. Recent data from the U.S. Census Bureau indicates that between January and September of this year, the U.S. imported approximately $435 billion Canadian dollars worth of goods from Canada.
The potential implementation of Trump’s tariffs has raised concerns among business owners like Debbie Kavourias, who relies heavily on imported products for her hardware store in New York. Kavourias imports various goods from Canada, Mexico, and China, with around 70 per cent of her inventory being sourced from international suppliers. She expressed apprehension about the possibility of having to reduce inventory or pass on tariff-related costs to customers.
Summers advised the Canadian government to remain steadfast in its commitment to global principles and alliances while navigating the challenges posed by Trump’s tariff threats. He commended Canada for its historical advocacy for decency in the global system and urged the country to uphold its values amid evolving economic dynamics.
As the debate over tariffs intensifies, it is essential for policymakers and stakeholders to carefully consider the potential consequences of protectionist measures on both domestic and international economies. By fostering dialogue and collaboration, countries can work towards sustainable economic growth and stability in an interconnected world.