Nobel Prize-winning economist Robert Shiller predicts that President Donald Trump’s corporate tax cuts are probably here to stay but his tariffs won’t last because they are “not a sustainable policy.”
Shiller, a professor of economics at Yale University, said Trump’s tariffs are “too crazy” to last.
“They are generating so much anger around the world. It’s not a sustainable policy,” Shiller told CNBC’s “Power Lunch"
“They are generating so much anger around the world," said Shiller, who was awarded the Nobel Prize in Economic Sciences with Eugene Fama and Lars Peter Hansen in 2013.
Trump has been supporting the market with his “capitalist tilt,” said Shiller, who helped develop the widely-followed S&P/Case-Shiller Home Price Indices.
“People believe that he’s good for the market. But not necessarily if we start antagonizing,” he said, noting the recent meeting of G-7 leaders “looked grim” in terms of economic optimism.
“This kind of antagonism with our allies I think will eventually harm confidence,” said Shiller, who developed the cyclically adjusted price-earnings (CAPE) ratio market valuation measure, which is calculated using price divided by the index's average historical 10-year earnings, adjusted for inflation.
To be sure, an escalating trade dispute between the United States and other leading economies battered U.S. stocks on Monday, handing the S&P 500 and Nasdaq their steepest losses in more than two months.
The Dow Jones Industrial Average ended the session below its 200-day moving average for the first time since June 2016, Reuters reported.
The S&P 500 tumbled as much as 2 percent early Monday on reports that the U.S. Treasury Department was drafting curbs that would block firms with at least 25 percent Chinese ownership from buying U.S. tech firms.
U.S. Treasury Secretary Steven Mnuchin later said in a message on Twitter that restrictions would apply, not specifically to China, but “to all countries that are trying to steal our technology.”
But Wall Street’s major indexes only pared losses after White House trade adviser Peter Navarro indicated a softer stance on investment restrictions in a CNBC interview.
(Newsmax wire services contributed to this report).
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