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Investing.com -- Larry Summers, a respected professor and President Emeritus at Harvard, and a former Secretary of the Treasury under President Clinton, has expressed strong criticism of President Trump’s plan to impose 25% tariffs on goods from Mexico and Canada and a 10% tariff on Chinese goods.
Summers voiced his concerns about the potential negative impacts of such tariffs. He remarked that these tariffs would likely increase prices on a wide range of consumer goods, including automobiles and gasoline. He also suggested that as tariffs are passed on to consumers and other firms raise prices in response, this could negatively affect American job creation by making American firms less competitive.
He pointed out that many exported goods involve imported inputs, with cars, for example, moving back-and-forth across the border between five and ten times during assembly. This, Summers argued, would make North America as a whole less competitive compared to Europe and Japan.
Summers also expressed concern about potential retaliation from allies. He believes that these tariffs could provoke retaliatory actions that are designed to maximize economic pain for the United States.
Furthermore, he argued that these tariffs could destabilize the Mexican economy, potentially leading to increased migration on the southern border of the United States.
In terms of foreign policy, Summers criticized the new administration for punishing close allies and rewarding adversaries. He argued that the United States, by demonstrating a willingness to impose arbitrary tariffs as a form of leverage, could be seen as an unreliable partner by other countries. This, he warned, could undermine the country’s economy, power, and national security.
Summers concluded by stating that these actions present a significant test for the American business community. He hopes that business leaders will recognize that this is not a pro-business strategy to promote economic growth and will have the courage to voice their concerns.
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