^{US Treasury Secretary Janet Yellen attends a business round table whith members of the American Chamber of Commerce in China. | Pedro Pardo—AFP/Getty Images}

‍

Former Treasury Secretary Janet Yellen has expressed serious concerns regarding the potential economic impact of President Donald Trump's recent tariff implementations. In a CNBC interview, Yellen stated that the probability of a recession has "gone way up" due to these trade policies, highlighting the substantial risks posed to both consumer spending and business investment.

Consumer Impact

Yellen emphasized that the tariffs could impose an estimated $4,000 burden on the average American household. This significant cost increase may lead to reduced consumer spending across various sectors, potentially slowing economic growth.

Business Investment Concerns

The uncertainty generated by the shifting tariff landscape is causing businesses to hesitate in making new investments. Yellen warned that this reluctance could further dampen economic activity, increasing the chances of a significant recession.

Federal Reserve's Position

Despite the growing risks, Yellen believes the Federal Reserve will be cautious about cutting interest rates. She noted that the inflationary pressures resulting from tariffs might deter the Fed from implementing rate reductions, even in the face of a potential economic slowdown.

Global Market Reactions

The international response to the U.S. tariff policies has been one of concern. Yellen pointed out that investors are beginning to shy away from dollar-based assets, indicating a loss of confidence in U.S. economic policy. This shift is evident in the recent rise in Treasury yields and the weakening of the dollar, which deviate from typical market behavior during periods of uncertainty.

International Trade Relations

Yellen also highlighted the confusion among international partners regarding the U.S. trade strategy. She described the administration's policy as chaotic, making it challenging for other countries to navigate the evolving trade environment.

‍

The implementation of tariffs as a tool for economic policy carries significant risks. Yellen's warnings underscore the potential for these measures to backfire, leading to increased costs for consumers, reduced business investment, and heightened chances of a recession. As the situation unfolds, careful consideration and strategic planning will be essential to mitigate these risks and maintain economic stability.

‍