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"If our policy is to try to wall off the U.S. market and try to hope that other countries fail, 'that could be a policy.' I think it's a policy that will be catastrophic in terms of our long-term security interests," Summers said on "Squawk Box."
If Trump's promise to rework NAFTA, the North American Free Trade Agreement, were to end up scrapping the deal, Mexico's trade barriers would go up more than those in the U.S., said Summers, who also was economic advisor President Barack Obama.
Since Trump's trade policies have come closer to going into effect, the Mexican peso has dropped about 15 percent.
"That means anybody thinking about locating in Mexico now has a 15 percent cost advantage," Summers said. "That 15 percent is huge relative to what he's accomplished yelling at a few CEOs."
"It actually works out in a counterproductive way," he added.
Summers also criticized the House GOP's border adjustment tax on imports. "If we do the border adjustment, my guess is that the dollar will rise substantially," he said. "The dollar will rise but it won't rise enough to fully protect the importers. "