Janet Yellen, former Federal Reserve Chair and US Treasury Secretary, has criticized President Donald Trump’s tariffs as “misguided” and “unclear.” She expressed concerns that the tariffs could fuel inflation and induce a slowdown in economic activity.
The former Fed chair made her comments on Bloomberg Television, saying the world is in a state of uncertainty. In April, Trump announced a sweeping reciprocal tariff regime, which sent the stock market tumbling. However, the administration later paused trade deals, and the market rebounded.
Despite this, the 10% blanket tariff on other countries remains in place, and China has retaliated with its own tariffs. Trade between the two countries is still largely shut down, but some exemptions have been made for items like smartphones and computers.
Yellen warned that even if the situation calms down, recession calls are likely to persist. She stated that consumer sentiment is plummeting, and inflation expectations are soaring. This could lead to a decline in consumer spending and business investment, causing economic activity to slow.
The Federal Reserve is keeping an eye on tariff-induced inflation but also considers its dual mandate of stable prices and maximum employment. Yellen believes that if the economy weakens, unemployment rises, and a recession occurs, it will be a good reason for the Fed to cut interest rates.
However, she notes that the tariffs’ impact may not be limited to one-time price shocks. Workers may negotiate higher wages to offset costlier prices, and further tariffs could lead to ongoing inflation. Yellen views the escalating trade war as “legitimately damaging” to the US economy.
Experts like Mohamed El-Erian have expressed skepticism about the Fed’s ability to navigate this challenging environment.
Source: https://fortune.com/2025/04/15/janet-yellen-lucky-skirt-recession-tariffs-inflation-sentiment-fed