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By David Lawder
WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen stated on Tuesday she was frightened that President-elect Donald Trump’s plans to levy broad import tariffs may derail progress in quelling inflation and lift prices for households and companies.
Yellen, at a Wall Road Journal CEO Council occasion, additionally stated she was involved about U.S. fiscal sustainability and stated Congress wanted to search for methods to pay for any extensions of Trump’s 2017 particular person and small-business tax cuts, that are because of expire in 2025.
Trump’s plans to impose new tariffs of 60% on Chinese language imports and 10% to twenty% on items from elsewhere would “elevate costs considerably for American shoppers and create prices pressures” on firms,” Yellen stated.
“So it might have an adversarial influence on the competitiveness of some sectors of the USA economic system and will considerably elevate prices to households,” Yellen added. “So this can be a technique I fear may derail the progress that we have made on inflation and have adversarial penalties on development.”
Concerning the U.S. fiscal image, Yellen stated that extension of all expiring provisions of the 2017 Tax Cuts and Jobs Act would add $5 trillion to U.S. deficits over 10 years, and that Congress wanted to search out offsets to keep away from an “explosion” of debt.
The Biden administration turned in a $1.83 trillion funds deficit for the 2024 fiscal yr ended Sept. 30, the most important exterior of the COVID-19 period, as debt curiosity prices topped $1 trillion for the primary time.
“I’m involved about fiscal sustainability, and I’m sorry that we have not made extra progress,” Yellen stated. “I imagine that the deficit must be introduced down, particularly now that we’re in an setting of upper rates of interest.”
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Yellen stated she had a dialog with Trump’s selection for secretary, hedge fund supervisor Scott Bessent, and mentioned the Treasury’s broad duties, together with for financial and tax coverage, and worldwide alliances.
She stated she advised him “what he would discover at Treasury is a workers, and significantly civil servants, who’re analytical, proficient, skilled, function with excessive integrity and produce evaluation that may be relied on that’s essential to monetary markets and to the economic system.”
She stated she advised Bessent that the division’s evaluation and insurance policies associated to the $28 trillion U.S. Treasury debt market assist the U.S. economic system and monetary markets perform higher.
On the Federal Reserve, Yellen stated she was a “sturdy proponent of an impartial, and non-partisan, non-political Fed.”
Trump was free to touch upon Fed coverage, Yellen stated, however latest Democratic administrations have shunned doing so, whereas on the similar time the Fed has turn out to be extra communicative, offering extra ahead steering about its coverage logic, which has helped it avoid political affect.
“I feel it is a mistake to turn out to be concerned in commenting on the Fed and positively taking steps to compromise its independence,” she stated. “I imagine it tends to undermine the boldness of the monetary markets and in the end of People in an essential establishment.”
