Robert Rubin Blames Trump for Most Uncertainty in 60-Year Career

Yahoo

04-03-2025

(Bloomberg) -- Former Treasury Secretary Robert Rubin said President Donald Trump's economic policies have stoked the 'greatest uncertainty' in his six-decade career, warning that they will undermine confidence, worsen the US fiscal trajectory and endanger US credibility on the global stage.
How Upzoning in Cambridge Broke the YIMBY Mold
Remembering the Landscape Architect Who Embraced the City
Hong Kong Joins Global Stadium Race With New $4 Billion Sports Park
US Tent Facility is Holding Migrant Families Longer Than Recommended
California School District Ravaged by Fires Cuts 151 Jobs
'A lot of what is going on is adversely affecting confidence — it is now, and I think even more so in the future,' Rubin said in an interview from the Bloomberg Invest conference in New York Tuesday, referring to confidence in the rule-of-law. He said the Trump administration appears to be targeting its opponents in its application of law, and is outright violating commitments made in treaties with trading partners.
Rubin singled out the efforts by Elon Musk's DOGE to shrink federal spending as 'doing tremendous damage to government and to the recipients of government services.' Rather than creating efficiencies, 'what DOGE is going to do is tear apart our government.'
Rubin, who oversaw a shift to budget surpluses as Treasury chief under Democrat Bill Clinton in the 1990s after serving as co-chairman of Goldman Sachs Group Inc., said that while some federal spending can be cut, 'as a practical matter' there's insufficient scope for that to rein in deficits.
More broadly, Rubin hammered Trump's tariff hikes for wrecking the foundation of the postwar global economic framework, which was based on reducing trade barriers in order to boost productivity and people's livelihoods.
Postwar Framework
'We have spent all these years since World War II developing alliances and allies, supported by all sorts of commitments,' he said. This was 'all in our economic self-interest and our geopolitical self-interest — and I think we're putting all that at risk.'
Trump as of Tuesday has added 25% tariffs on all Mexican and most Canadian goods, and a 20% surtax on Chinese goods, with further levies planned in the coming weeks.
The increases in levies amount to violations of treaty obligations, 'which can affect our credibility around the world,' Rubin said. 'They create a very serious risk of inflation,' he also said.
'If the new normal is a world of tariff walls, then we'll all just be less productive, less efficient,' he said. 'And our people will, as a result, do less well than they would otherwise have done.'
Rubin, 86, said that he's now seeing the 'greatest uncertainty' in his about-60 years of being involved in 'decision making of one sort or another with respect to markets and economies.'
Also speaking at Bloomberg Invest, Lazard Inc. President Ray McGuire, said that 'economically and geopolitically, the anchor — the sacrosanct anchor — that the US has is rule of law.' Now, 'it has become part of the conversation, where historically it hasn't.'
'The more that actions are unpredictable, then that goes to the level of confidence' among business managers, said McGuire, who's a Democrat. 'They will wait this out to see what the implications are' before deploying pent-up capital, he said.
He tallied about $10 trillion 'sitting on the sidelines,' including $7.5 trillion on corporate balance sheets and $2.5 trillion with asset managers. A further $14 trillion of debt is available via the banking system and asset managers, he said. 'We will pause for a while as we understand and interpret the implications of the tariff dynamics.' He added that it's 'unclear' if capital will be engaged at the same level as before once a new-normal is reached.
Rubin said that, as for the revenue impact of Trump's hikes in import levies, they can only have a 'modest' effect. 'The tariffs will provide revenues, but at the same time they're going to adversely affect growth, most likely,' making the net effect very small, Rubin said.
Rubin echoed the concerns of most economists, including the current Treasury secretary, Scott Bessent, about the US fiscal trajectory.
'Enormously Dangerous'
'It is enormously dangerous,' Rubin said. 'And the policies of this administration, at least as currently projected, are going to make that worse.'
Trump wants to make the 2017 tax cuts permanent in legislation ahead of the expiration of individual tax-rate reductions from that package at year-end, a move that most economists say would boost the deficit without offsetting measures. The Congressional Budget Office projects US debt to reach record levels as a ratio of GDP in four years' time, in a projection that counts on the tax cuts expiring and revenue rising as a result.
Ray Dalio, the billionaire founder of hedge fund Bridgewater Associates, recently cautioned that the US faces a debt crisis 'heart attack' in about three years unless the deficit is brought down. The gap has exceeded 6% of gross domestic product the past two years despite strong economic growth.
'Conceptually, at least, he's right,' Rubin said of Dalio. 'We're likely to have a higher interest rate, you'll have reduced business confidence, you'll have fewer resources for public investment and national security. That will happen over time.'
For now, Treasury yields have been dropping, something Rubin said was a product of concerns about slower economic growth. Ten-year yields were at 4.21% as of 2:28 p.m. in New York, down from as high as 4.81% in mid-January.
Asked about prospects for a 'Mar-a-Lago Accord' between the US and other nations to bring down the value of the dollar — an analogue to the 1985 Plaza Accord — Rubin said that the circumstances now are very different.
'I'm not sure what they're driving at' with regard to any initiative to lower the dollar, Rubin said. 'But whatever it is, I don't think they get there this way.'
'Whatever you want to do, you do not want to approach it through tariffs,' he said. He also said that the inflows of foreign capital into the US is a positive for the nation, helping fuel growth that allows for paying back debt.
Rubin made Tuesday's comments in two separate interviews with Bloomberg TV's Lisa Abramowicz and Bloomberg Radio's Alix Steel and Paul Sweeny.
--With assistance from Alix Steel, Paul Sweeney and Lisa Abramowicz.
(Updates with comments from Lazard's McGuire, starting in paragraph before video clip.)
Rich People Are Firing a Cash Cannon at the US Economy—But at What Cost?
The Mysterious Billionaire Behind the World's Most Popular Vapes
Snack Makers Are Removing Fake Colors From Processed Foods
Trump's SALT Tax Promise Hinges on an Obscure Loophole
The US Is Withdrawing From Global Health at a Dangerous Time
©2025 Bloomberg L.P.