Trump Tariffs Could Cost $30 Trillion Or About $300,000 Per Family, Says Former Treasury Secretary Larry Summers: 'Most Expensive And Masochistic'
Former Secretary of the Treasury Lawrence H. Summers, also known as Larry Summers, described the tariffs imposed by President Donald Trump as the “most expensive and masochistic” move by the U.S., which could roil the economy, erasing trillions of dollars.
What Happened: Summers explained the calculation behind the magnitude of losses that the economy can endure in a series of X posts. According to him, the stock futures fell 2-3% after Trump's announcement, erasing about $1.5 trillion, and the market had already priced in some of the impact in the days leading up to April 2nd.
Thus, he estimated losses of about $4 trillion in the stock market, which represents the lost corporate profits. Additionally, Summers explains that “Corporate profits are about 10 percent of GDP, so very conservatively the present value of economic loss is 5 times the stock market loss or $20 trillion.”
As the market tumbled further, in a following post, he highlighted that "The best estimate of the loss from tariff policy is now is closer to $30 trillion or $300,000 per family of four."
Why It Matters: Apart from Summers' estimations, other analysts chimed in with their views on the tariffs. Wedbush's Daniel Ives said, "We would characterize this slate of tariffs as ‘worse than the worst case scenario' the Street was fearing."
Economist Mohamed El-Erian said that the tariffs imposed by Trump point to "major worries about global economic growth."
Former Secretary of Labor, Robert Reich, said, "Trump's tariffs will result in a massive transfer of wealth from working people into the hands of millionaires and billionaires."
Justin Wolfers, senior fellow at the Brookings Institution, said, "Today’s announcement was so much worse than expected that it caused the chance of a 2025 recession to rise from 42% to 52%."
Price Action: Ahead of the tariff announcements on Wednesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose in trade. The SPY was up 0.63% to $564.52, while the QQQ advanced 0.73% to $476.15, according to Benzinga Pro data.
On Thursday, the futures of the Dow Jones index dropped 2.51%, whereas the S&P 500 and Nasdaq 100 indices also slumped by 3.09% and 3.48%, respectively.
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