Nobel-winning economist warns Trump policies risk causing stagflation
'It risks the worst of all possible worlds: a kind of stagflation,' Stiglitz, who served as chair of former President Clinton's Council of Economic Advisers, told The Guardian.
He said shifting tariffs will cause corporations to question where to set up shop and base their factories amid an uncertain future.
'If you're a corporate in the US or in Europe, do you think you have a global market, or do you have just a European market? Where do you locate your factories?' he asked.
Stiglitz noted the U.S. has become a 'scary place to invest' due to the unexpected abandonment of government contracts and trade agreements, including the US-Mexico-Canada economic deal brokered by Trump during his first administration.
Within his first month in office, the president signed off on 25 percent tariffs on Canada, 25 percent tariffs on Mexico but then delayed the action following their willingness to enforce his suggested border security strategies.
He also approved a study on proposed reciprocal tariffs on countries he claims have placed unfair policies on the U.S.
Stiglitz and others, including Former Treasury Secretary Larry Summers, have said the commander-in-chief is making the wrong move.
'Almost all economists agree that the tariffs will increase prices. How much it will increase prices is a little bit affected by the magnitude of the appreciation of the exchange rate, but all economists think that the extent of the appreciation of the exchange rate won't be anywhere near enough to compensate for the tariffs,' he told The Guardian.
'I could certainly see a scenario where we get to stagflation – we get inflation, and a weak economy. I cannot see a really robust economy, because I just see the global economy suffering so much from the uncertainty that Trump poses.'
Despite criticism, Trump said short term pain is worth the benefit of restructured trade policies.
'This will be the Golden Age of America!' Trump wrote on Truth Social. 'Will there be some pain? Yes, maybe (and maybe not!). But we will make America great again, and it will all be worth the price that must be paid. We are a country that is now being run with common sense — and the results will be spectacular!!!'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
31 minutes ago
- Yahoo
Trump Proposes UFC Event in Wild Location
Trump Proposes UFC Event in Wild Location originally appeared on Athlon Sports. President Donald Trump's relationship with the UFC is well-documented. He has attended multiple events, and fighters like Conor McGregor have visited him at the White House, reinforcing the alliance between the MMA promotion and his political brand. The UFC's massive popularity, especially among younger male demographics, makes it a centerpiece for Trump and his supporters, who include the UFC's CEO and President, Dana White. Advertisement Now, Trump has floated a bold and unconventional idea to celebrate America's upcoming 250th anniversary: a UFC championship fight on the White House grounds. Donald Trump and Dana WhiteEd Mulholland-GettyImages During a speech at the Iowa State Fairgrounds, Trump revealed his desire for a large-scale event featuring a UFC fight with up to 25,000 spectators as part of the "America250" festivities. 'Does anybody watch UFC? The great Dana White? We're going to have a UFC fight. We're going to have a UFC fight, think of this, on the grounds of the White House. We have a lot of land there,' Trump said. While the announcement energized Trump's supporters, the feasibility and appropriateness of hosting a violent combat sport on White House property were clearly not in the president's consideration. The White House has never before been used as a venue for a pay-per-view sporting event, let alone a sport with a fan base as rowdy as MMA. Advertisement Overlooked in his proclamation were the logistical hurdles, including Secret Service approvals and crowd control, that could make the plan more aspirational than practical. The UFC's involvement adds another layer of controversy. While the organization has grown into a mainstream sports powerhouse, it has also faced criticism over fighter pay, benefits, and overall dwindling quality. As of now, the proposal lacks concrete details, and the idea is likely nothing more than mere political theater. Given Trump's history of controversy, however, the possibility cannot be entirely ruled out. Related: The UFC Could Be On The Verge Of A Huge Partnership Related: Dana White & Mark Zuckerberg Announce UFC-Meta Partnership: Enhanced Fan Experience, But at What Cost to Fighters? This story was originally reported by Athlon Sports on Jul 4, 2025, where it first appeared.
Business Insider
32 minutes ago
- Business Insider
Trump's tax plan won't help Tesla, but 2 other EV companies got a stock boost
President Donald Trump's tax bill led to a big stock boost for two Tesla rivals. American electric vehicle makers Rivian and Lucid rose as much as 4.6% and 8.8%, respectively, on Thursday. The gains came after an analyst note from BNP Paribas said that the two companies stand to benefit from Trump's tax bill ending EV tax credits. On Thursday, the House passed the final version of the bill, which would extend the president's 2017 tax cuts and make key changes to the tax system. The bill would also end the $7,500 EV tax credit awarded to buyers on September 30. The tax credit removal is expected to lower demand for EVs, and bigger automakers could be hit harder. Per the new bill, cars made by companies that sold more than 200,000 accepted EVs between December 31, 2009, and December 31, 2025, do not qualify for the tax credit. Tesla delivered more than 336,000 vehicles in the first quarter of 2025 alone. Rivian delivered 8,000 vehicles in the same quarter, while Lucid delivered 3,109 vehicles. Like Tesla, Rivian has been struggling with cars don't qualify for the tax credit, but the company has relied on a leasing loophole for customers to use it. Rivian does not qualify because a requirement mandates that a significant portion of the car battery's materials should be sourced from the US or its trade partners. Lucid vehicles qualify for the $7,500 federal EV tax credit. Tesla and Lucid are down 22% and 28.5% so far this year. Rivian's stock is down 2% in the same time period. Big hit to Tesla The loss of the EV tax credit could be a big hit to Tesla, analysts say. Last month, Seth Goldstein, an equity strategist at Morningstar, told Business Insider that the expedited elimination of the EV tax credit would be "the biggest area that could impact Tesla." "Consumers have increased long-range EV choices at similar price points as Tesla," Goldstein said. "It's on Tesla to make the case for consumers to even slightly pay up today versus some other EVs." Goldstein added that tax credit elimination could decrease sales volume, which the automaker has been struggling with. JPMorgan analyst Ryan Brinkman wrote in a note last month that Trump's bill, combined with other proposed legislation, including ending the California Air Resources Board Program, threatened more than half of Tesla's 2025 profits. Brinkman said that the $7,500 consumer tax made up 19% of Tesla's 2024 earnings before interest and tax.
Business Insider
37 minutes ago
- Business Insider
Europe's top negotiator says it's impossible to get a trade deal done by Trump's July deadline
Ursula von der Leyen, the president of the European Commission, said it was "impossible" to reach a detailed trade deal by President Donald Trump's July 9 deadline. Von der Leyen said the US and European Union were aiming for a July 9 "agreement in principle" trade deal, which would be light on details. She was speaking at a press conference in the Danish city of Aarhus on Thursday, at a European Union summit to mark the start of Denmark's six-month-long EU presidency. "It's a huge task because we have the largest trade volume globally between the European Union and the United States, 1.5 trillion euros, very complex and a huge quantity," she said. She added, "Indeed, what we are aiming at is an agreement in principle. Because I mean, such a volume in 90 days, an agreement in detail, impossible." The European Union was one of the hardest hit by the slew of tariffs Trump announced on April 2, seeing a tariff rate of 20%. Responding to the tariffs, Von der Leyen said in an April statement on X that Trump's tariffs were a "major blow to the world economy" with "dire" consequences for millions of people. Trump later issued a 90-day pause to allow for trade negotiations, and all of the US's trade partners were subject to an interim 10% tariff rate. In February, months before the April 2 tariffs, Trump ordered a 25% tariff on all steel and aluminum imports, and the EU retaliated with tariffs on 26 billion euros, or $28.4 billion, worth of US goods. In May, he floated raising the EU's tariff rate to 50% from June 1, saying the group was "very difficult to deal with" and the US's trade negotiations with the EU were "going nowhere." However, Trump retracted the threat after a call with Von der Leyen. He said she had requested an extension on the June 1 deadline. "I agreed to the extension — July 9, 2025 — It was my privilege to do so," Trump wrote on Truth Social on May 25. On May 26, Paula Pinho, a spokeswoman for the European Commission, said in a press conference that Von der Leyen and Trump had "agreed both to fast-track the trade negotiations and to stay in close contact." Representatives of the European Commission and the White House did not respond to requests for comment from Business Insider.
