On Thursday, the S&P 500 declined by 10% from its February record, putting it in correction territory.
“The more people are looking for sharp cuts by the Fed, the more they’re judging that a recession is likely,” said Summers, who now serves on the board of OpenAI.
Summers called Trump’s tariffs “confused protectionist policy” because “manufacturing has trended downwards for 60 years as a share of the economy,” including even in China, primarily due to automation and assembly lines.
A better approach to rebuilding U.S. manufacturing and jobs, Summers suggested, would be to “subsidize outputs rather than raise the price of manufacturing inputs” via import tariffs. Summers also said it does not make sense to tariff goods made in Canada and Mexico, which, essentially, are manufacturing partners to the U.S.