(Bloomberg) — Top Wall Street executives, financial regulators and analysts gathered in New York’s financial district said they were bracing for market volatility from President Donald Trump’s latest round of tariffs on the biggest US trading partners.
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“We should all buckle up a bit,” Carlyle Group Inc. Chief Executive Officer Harvey Schwartz said Tuesday at the Bloomberg Invest conference in New York.
The tariffs announced this week lobbed 25% duties on most Canadian and Mexican imports and raised the charge on China to 20%.
Markets gyrated as traders grappled with questions about how tariffs will affect prices across the economy. The S&P 500 tumbled 1.2% on the day, wiping out all of the benchmark’s gains since Trump’s Nov. 5 election victory.
Then, Commerce Secretary Howard Lutnick told Fox Business that the administration could announce a plan for tariff relief on Mexican and Canadian goods covered by North America’s free trade agreement as soon as Wednesday.
Tariff Walls
“We’ve not seen this level of tariffs, at least in modern times,” Lazard Inc. President Ray McGuire said at the event.
Former US Treasury Secretary Robert Rubin warned that the tariffs will eventually have adverse effects on the economy.
“If the new normal is a world of tariff walls, then we’ll all just be less productive, less efficient and less effective as economies,” Rubin said, adding that the levies would violate congressionally approved treaties and hurt growth and productivity.
New York Federal Reserve President John Williams pointed out that the last round of tariffs in 2018 and 2019 prompted a short-term boost to inflation, but that at the time central bankers were dealing with inflation that was too low.
Now, after a few years of too-high inflation, “it’s a different context,” he said.
International Business Machines Corp. Vice Chairman Gary Cohn pointed out that tariffs have various purposes, but if the point is to raise money, it’s doing so at the expense of less-wealthy Americans. Tariffs are “a really regressive way” to raise revenue, he said.
Cohn served as chief economic adviser to Trump during his first administration before resigning in 2018 amid a disagreement over the president’s plans to levy large steel and aluminum tariffs.
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