[Source/Observer Network Wang Yi] The practice of the Trump administration in imposing tariffs indiscriminately not only causes global market fluctuations but will also have a huge impact on American consumers and various industries.

According to a report by the Financial Times on May 1, Janet Yellen, former chairman of the Federal Reserve and Treasury Secretary under former President Biden, said that the US highly relies on China for critical minerals to develop the new energy industry, and imposing tariffs on these minerals may bring particularly big problems.

"We highly rely on most of China's critical minerals, which are used in clean energy technologies, batteries, and other fields. I believe that imposing high tariffs on these minerals may hinder industries that otherwise had opportunities," Yellen said.

Of course, Yellen also compared the practices of the Trump administration with those of the Biden administration, boasting that Biden's approach was "smarter." Last May, the Biden administration announced additional tariffs on $18 billion worth of Chinese imports, raising the tariff on Chinese electric vehicles to 100% and the tariff on Chinese solar cells and their components to 50%.

Yellen believes that the tariffs imposed by the Biden administration are "very limited and targeted," giving some breathing room to American solar cell companies, but the tariffs imposed by the Trump administration were too high.

"When you decide to support solar cell manufacturing, you must be very careful not to impose higher tariffs on inputs in this industry," Yellen warned.

Janet Yellen Video Screenshot

However, it is obvious that Trump showed no interest in developing solar cells, electric vehicles, and other new energy sources; he favored traditional energy industries more.

On his first day in office, Trump signed an executive order announcing that the US would withdraw again from the Paris Agreement aimed at addressing climate change, declaring a national energy emergency, increasing traditional energy extraction, ending Biden's "green new deal," and revoking electric vehicle incentives to save the US traditional automobile industry.

The comprehensive tariffs announced by Trump on April 2 brought another impact to the US clean energy industry. Time magazine reported on April 8 that although Trump claimed the tariffs would promote domestic production, they would inevitably increase the cost for US companies to purchase products and raw materials from overseas, disrupting global supply chains.

Bentley Allan, associate professor at Johns Hopkins University and co-leader of the Net Zero Industry Policy Lab, stated that if we want to produce batteries, solar panels, and wind turbines in the US, "we need to procure parts and materials internationally," and "these parts and materials are not something we can start producing immediately according to the timeline to achieve climate goals."

Allan pointed out, "Even if we want to establish a complete battery or solar supply chain in the US, we need a long time to accumulate the necessary expertise and skills," and "creating shocks during this process actually slows down the entire process, making it harder to achieve this goal."

Solar Panel - Brookings Institution

Yellen also issued a warning that Trump's tariffs would have an "extremely adverse" impact on the broader US economy. She pointed out that about 40% of imported products in the US are used as inputs for domestic production, and tariffs will have an "extremely adverse" impact on the US, consumers, and corporate competitiveness.

"I am not yet ready to say that I expect an economic recession," Yellen added, "but there is no doubt that the likelihood of a recession has greatly increased."

On April 30, the US Department of Commerce released the worst quarterly performance of the US economy since 2022. Affected by a significant increase in imports and reduced government spending, the US GDP contracted at an annual rate of 0.3% in the first quarter of this year compared to the previous quarter.

Although the Trump administration once again blamed the previous administration for this poor economic data and called on Americans to "be patient," the extent of the GDP data far exceeded market expectations, highlighting the rising uncertainty caused by Trump's tariff policies, leading to a decline in business and consumer confidence.

In early April, Yellen told CNN that Trump's tariffs could lead to reduced corporate investment and consumer spending, potentially triggering an economic recession. "This is the most serious self-inflicted harm I have seen a government do to a well-functioning economy."

Yellen criticized that the tariffs on China might be particularly destructive, "which will have a huge impact on the US and global economies, and no one knows where these policies will ultimately lead."

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7499724785446863395/

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