Yellen's latest interview: Unable to reduce the deficit "I am very sorry," Trump's tariffs will undermine progress in reducing inflation, has already spoken with Bessent

The Biden administration is about to come to an end, and U.S. Treasury Secretary Janet Yellen is also set to leave. On the eve of her departure, she shared her views on the U.S. economy and trade.

Recently, Yellen discussed the potential impacts of Trump's tariff plan on the economy and business, the U.S. deficit situation, and Biden's "economic legacy" at an event hosted by The Wall Street Journal.

First, regarding tariffs, widespread tariff imposition would undermine progress in reducing inflation and adversely affect economic growth. Yellen stated:

Almost all economists agree that widespread tariffs would significantly raise prices for American consumers and put cost pressure on businesses that rely on imported inputs.

This would negatively impact the competitiveness of certain sectors of the U.S. economy and could significantly increase household costs, potentially "undermining" the government's progress in curbing inflation and adversely affecting economic growth.

Yellen also expressed concerns about the U.S. government's fiscal situation, stating:

I am worried about fiscal sustainability, and it is unfortunate that we have not made more progress. I believe the deficit needs to be reduced, especially in the current high-interest-rate environment. Over the past year, the cost of debt interest has increased by hundreds of billions of dollars. This is one of the biggest factors contributing to the increase in the budget deficit.

It is worth mentioning that during Yellen's tenure, the U.S. experienced the largest debt growth in history. While she served as Chair/Vice Chair of the Federal Reserve, the total U.S. debt increased by $6.8 trillion, and during her time as Treasury Secretary under Biden, the total U.S. debt increased by another $8.4 trillion.

As her departure approaches, Yellen also summarized Biden's "economic legacy," believing that the U.S. economy is on the right track. Yellen stated:

The U.S. has achieved the fastest and strongest recovery among developed countries post-pandemic, and the economy is currently performing well, with inflation rates now falling back to near target levels.

We are also focused on the medium- and long-term performance of the economy, having enacted important legislation, much of which was bipartisan. The Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act represent our first serious investments in a range of critical areas of the economy in a long time, from restoring our infrastructure to creating jobs in key industries vital for the future: clean energy and semiconductors.

When discussing advice for her successor, Ben S. Bernanke, Yellen stated:

I had a conversation with him before Thanksgiving. I told him that I think he will find this to be a very interesting and challenging job. The responsibilities of the Treasury are very broad, involving not only a wide range of economic policies but also tax policy, sanctions policy, and international alliances. I also told him that the Treasury staff, especially the civil servants, are skilled, professional, and act with integrity, providing reliable analysis that is important for financial markets and the economy