Former Treasury Secretary Says Families Will Lose At Least $5,000 As a Result of Trump's Tariffs

Former Treasury Secretary Larry Summers said on Tuesday that President Donald Trump's tariffs will result in a loss of at least $5,000 per household, and that millions of jobs will be lost as well.

Speaking to Bloomberg Television, Summers specified that he believes 2 million people in the U.S. could lose their jobs due to the tariff increases and that there will likely be a recession.

Summers went on to say that there will be "very important choices in the weeks ahead" and claimed he would suggest "backing off the policies that have been announced. He added that markets will probably continue to drop as a result. "We're very likely, in the context of a recession, to see markets reach levels significantly below they current level."

Stocks continued to drop on Tuesday, reversing earlier gains after both the U.S. and China doubled down on their stances. The S&P 500 entered a bear market. Trump said on Monday that China should remove the 34% tariffs imposed as a response to his earlier levies or he would increase the figure by a further 50%. Should he make good on the threat, large portions of Chinese imports to the U.S. would end up facing a 104% tariff. The levies are set to go into effect on Wednesday.

Summers' statement echoed those of BlackRock CEO Larry Fink, who said on Monday that most other CEOs he talks to believe that the U.S. is already in a recession. He added that inflation will likely remain high, something that would reduce the chances of rate cuts by the Federal Reserve soon.

Goldman Sachs also increased its forecast of a U.S. recession, placing the chances at 45%, 10 percentage points more than its previous estimate. It cited "a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty" as a result of the tariffs announcement.