×

Larry Summers on Trump: 'Hyper protectionism will make us poorer'

The Trump administration's "America First" approach and the protectionism it entails will "make us poorer," Larry Summers, former Treasury Secretary, told CNBC Wednesday night.

The economist said in an exclusive interview that he's concerned by President Donald Trump's "reckless disregard for the United States' role in upholding an international order."

"I've been very alarmed by the reluctance to rely on evidence and the setting of principle in making policy," he said, "rather than the reliance on gut-feeling and driving towards zero sum deals."

Specifically, Summers fears that the "protectionist" policies, such as the proposed border tax, could possibly impair and slow U.S. growth.

"Hyper protectionism will make us poorer," Summers said. "Consumers will pay more for their goods, which means they'll have less spending power to spend on American goods, and that'll definitely have consequences for the economy ... Other nations will retaliate, and that'll have consequences for the health of our companies. The consequences of protection are that we will be poorer and the world will be less safe."

The White House did not immediately respond to a CNBC request for comment. The Trump administration's well-established position is that the United States should reexamine its trade and regulatory practices to boost U.S.-based companies and create the jobs within U.S. borders.

Summers said that he does believe that corporate tax reform is imperative for the United States. But reform policies should be crafted with proposals that are more practical than the border-adjustment tax that was proposed by the House GOP and is getting an increasingly warm reception within the administration.

"I think the limbo we're in, in respect to corporate taxes that leave trillions of dollars abroad, is untenable and does real economic damage. So I'm a strong supporter of corporate tax reform," Summers said. "But it should be done right. It shouldn't be something that undermines the competitiveness of many businesses."


  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

Wall Street