Ex-Treasury director says US seems like ‘problematic emerging market’
(MENAFN) Former U.S. Treasury Secretary Lawrence Summers has issued a stark warning about the financial risks stemming from President Donald Trump’s aggressive tariff policies, likening current market instability in the U.S. to that seen in volatile emerging economies.
Speaking just before Trump unexpectedly announced a 90-day freeze on further tariff increases, Summers criticized the administration’s trade moves, saying the chaos in financial markets was “entirely caused by U.S. tariff policy.” He pointed to the unusual economic indicators—rising long-term interest rates paired with plunging stock prices—as signs that global investors are increasingly wary of U.S. assets.
“We’re being viewed more like a troubled emerging market,” Summers wrote on X, formerly Twitter. He warned that ballooning government debt, increasing deficits, and declining confidence among foreign investors could lead the U.S. into a dangerous economic spiral.
Trump’s trade war had initially triggered a dramatic market downturn, with his decision to impose a 10% blanket tariff on all imports—later raised to 125% for Chinese goods—wiping out over $10 trillion in stock market value. At the same time, the yield on 10-year Treasury bonds surged to nearly 4.5%, an unusual move during a market panic.
Although Trump’s sudden tariff freeze sparked a significant market rally, it only offset part of the earlier losses. Summers criticized the shift as a panic move rather than a calculated policy change. “Bullies back down,” he said, calling the administration’s actions indicative of “banana republic” behavior. He argued the decision came not from strength, but from fear after markets collapsed.
Summers further condemned the administration’s approach as “reckless improvisation,” not a real strategy, and accused officials of misleading the public. He noted that even with the new freeze, tariff levels are approaching those of the 1930s Smoot-Hawley Act, warning it could cost average American families around $2,000 annually.
While the Trump administration defends the tariffs as a necessary tool to secure better trade deals and protect U.S. jobs, critics like Summers believe the unpredictability is harming investor confidence and jeopardizing long-term economic stability. “We’re not out of danger,” Summers concluded. “Much credibility has already been lost.”
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