Former Treasury Secretary Yellen Issues Stern Warning: Trump's Tariffs Could Trigger Recession

Former U.S. Treasury Secretary Janet Yellen delivered a stark warning, stating that the Trump administration's sweeping tariff policies would have "extremely adverse" consequences for the U.S. economy and could potentially push the country into a recession.

In an interview with the Financial Times, Yellen emphasized: "Trump's tariff strategy will have profoundly negative effects on the U.S., consumers, and the competitiveness of businesses reliant on imported inputs." She noted that roughly 40% of U.S. imports consist of production inputs for domestic industries.

"I can’t yet definitively predict a recession, but the risks have risen significantly," Yellen cautioned.

Her warning comes as recent data showed first-quarter GDP contraction, driven by a surge in imports as businesses rushed to stockpile goods ahead of potential tariffs.

While the $29 trillion U.S. economy continues to demonstrate overall resilience in spending and production, recent surveys indicate a sharp deterioration in consumer and business confidence.

The remarks follow Trump’s April 2 announcement of steep "reciprocal" tariffs on multiple nations, which triggered severe market turbulence.

Yellen, who recently joined the advisory board of Angeleno Group, a private equity firm focused on low-carbon technologies, warned that these tariffs could be particularly damaging to America’s clean energy sector.

"We’re heavily dependent on Asia for critical minerals used in clean energy tech, batteries, and more," she said. "Slapping massive tariffs on these goods could cripple industries that otherwise have real potential."

She stressed: "If you want to support solar panel manufacturing, you must be extremely careful not to impose higher tariffs on the raw materials needed to produce them."

The warning carries heightened significance for investors, as the global clean energy transition has become a major investment theme. Trump’s tariffs risk undermining U.S. competitiveness in this critical sector and triggering steep valuation declines for related firms.