Summers Warns Tariffs Could Trigger 50% Recession Risk, 200,000 Job Losses

Former U.S. Treasury Secretary Lawrence Summers has cautioned that the ongoing tariff measures could push the U.S. economy into a recession, potentially leading to job losses for approximately 200,000 Americans. Summers, who served under President Bill Clinton, voiced his concerns during an interview, underscoring the substantial economic risks associated with the current tariff policies.

Summers stated that the likelihood of an economic downturn has exceeded 50%, and in such a scenario, an additional 200,000 individuals could face unemployment. He also projected that each household could experience a reduction in income of at least $5,000. The former Treasury Secretary warned that the U.S. is on the verge of a recession, primarily due to the tariff measures being implemented by the current administration.

Summers highlighted that the coming weeks will be pivotal for the Trump administration's tariff plans, which he described as potentially more detrimental than the tariffs imposed during the Great Depression. He advised the administration to reconsider and possibly reverse the announced policies, asserting that this would be a wise decision.

Summers also noted that financial markets are already indicating the potential damage caused by the tariffs. He observed that whenever there are signs of tariff relief, the stock market experiences notable gains. Conversely, when there are indications that tariffs will continue, the market experiences a sharp decline. Summers cautioned that in the event of a recession, the market could drop to levels far below its current state.

The former Treasury Secretary also pointed out the broader economic implications of a downturn, including an increase in the fiscal deficit. He warned that this could lead to financial pressures not only for high-risk enterprises but also for countries with high-risk economies globally.

Summers further emphasized that if the tariff rates are raised to pre-World War II levels, the economic cost to both the U.S. and the global economy would be enormous. He stated that if these policies are fully implemented, the market losses could reach tens of trillions of dollars, with the stock market only reflecting a small portion of the overall economic impact.