Many economists were hoping that President Donald Trump would back down from the more severe tariffs he was threatening to impose on the United States’ trading partners, but on Friday, May 23, Trump floated a 50 percent tariff on goods imported from countries in the European Union (EU) and a 25 percent tariff on Apple products not manufactured in the U.S.
Over Memorial Day Weekend, however, Trump paused the EU tariff.
On Tuesday morning, May 27, CNN’s John Berman discussed the chaos that Trump is creating in the economy with Jared Bernstein — who chaired the White House Council of Economic Advisers under former President Joe Biden. And Bernstein expressed his worries not only about tariffs, but also, about the effect that Trump’s “big, beautiful bill” could have on the United States’ federal deficit.
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“When you’re carrying a debt load held by the public,” Bernstein told Berman, “that’s about the size of your GDP, which is ours. Our debt-to-GDP ratio is about 100 percent. That’s a $30 trillion debt burden. One point on the interest rate is 300 billion more in debt service. Now, our interest rate that we pay on our debt has been going up in a way that we haven’t seen for years. Over the past decade, it’s doubled. And that means that our debt service is going to be taking more of our resources from other things that we’d like to do. And you also have to ask yourself: Well, why the heck is that interest rate going up? It’s because creditors, those who lend to the U.S., are getting nervous about the extent to which Congresses and both sides are guilty.”
Bernstein continued, “But I will say what we’re seeing now from this Republican Congress — a complete disregard for the level of debt — is an outlier. I think some of our creditors are getting nervous and saying: Well, if we’re going to lend to you, we’re going to need a slightly higher return — a bit more yield on that interest rate. And so, that’s why many of us — it’s not just me — are more worried now.”
Trump’s erratic tariff announcements, according to Bernstein, are creating considerable “chaos” in the economy.
Bernstein told Berman, “This is Trumpian chaos. It’s the president kind of thrashing about. He’s unhappy with the pace of negotiations, and this is the way he shows it.”
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When Berman noted how “reactive” the stock market is to Trump’s tariff announcements, Bernstein argued, “I still believe… that the Trump Administration is basically looking for offramps from a trade war that it started and that it regrets now. It recognizes now — these folks will never come out and say this — but it recognizes that this is bad for markets, this is bad for the economy. It’s terrible for small businesses. It’s one of the most unpopular pieces of economic policy I’ve ever seen, and I’ve seen some unpopular policies. But Trump being Trump, they can’t just back off. They have to suggest that they won somehow or other. At any rate, the markets believe that this was all about looking for offramps.”
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Watch the full video below or at this link.
