Former U.S. Treasury Secretary Lawrence H. Summers intensified his critique of Washington’s trade strategy on Tuesday, as financial markets began to claw back some losses following a sharp downturn earlier in the week. His warnings came before President Donald Trump announced a 125% tariff on Chinese imports, which briefly rattled global investors but was followed by a mild market rebound. In a series of posts on social media platform X, Summers had already voiced alarm over the direction of U.S. policy. He stressed:
Developments in the last 24 hours suggest we may be headed for serious financial crisis wholly induced by U.S. government tariff policy.
The comments followed a steep jump in long-term interest rates and a broad decline across equity markets, amplifying fears of deeper economic instability.
Summers warned that the financial landscape was showing signs typically seen in emerging market collapses. “We are being treated by global financial markets like a problematic emerging market,” he stated. He further cautioned: “This could set off all kinds of vicious spirals, given government debts and deficits and dependence on foreign purchasers.” He emphasized that the current unease stems not from foreign shocks but from decisions made in Washington, asserting: “The only way to mitigate these risks is for President Trump to back off his current path. This is the first U.S. bout of U.S. financial instability caused by the U.S. government.”
His comments gained renewed urgency after Trump declared via Truth Social that the U.S. would impose a new 125% tariff on imports from China, effective immediately. Trump cited Beijing’s “unsustainable” conduct and alleged abuse of trade rules. At the same time, he announced a 90-day pause and a 10% reduced reciprocal tariff for more than 75 nations currently negotiating with U.S. trade officials. In a series of posts,
Summers responded: “Bullies back down. It is tragic to see the United States following banana republic policy approaches and market patterns.” He added: “The Administration was crowing over the weekend about all the countries that wanted to talk. No postponement then. Now they are rightly scared after collapsing markets. Reckless improvisation not a strategy and total dishonesty about what is driving them.” Noting that “Even their new regime has tariffs near Smoot-Hawley levels and will cost middle class families close to $2,000 dollars,” he concluded:
We are far from being out of the woods. Much credibility has been lost. Be afraid.
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