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.
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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."
See Also: How do billionaires pay less in income tax than you? Tax deferring is their number one strategy.
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."