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OLIVIER DOULIERY | AFP | Getty Images
US President Donald Trump
President Donald Trump’s corporate tax cuts are probably here to stay but it’s likely a different story for his tariffs, Nobel Prize-winning economist Robert Shiller told CNBC on Monday.
That’s because they are “too crazy,” said Shiller, a professor of economics at Yale University.
“They are generating so much anger around the world. It’s not a sustainable policy,” he said on “Power Lunch"
Trade tensions have been escalating between the U.S. and the rest of the world. On Sunday, The Wall Street Journal reported that Trump plans to bar several Chinese companies from making investments in American technology.
Meanwhile, last week, a flurry of back-and-forth tariff threats continued between the U.S. and China, as well as between the U.S. and the European Union.
His latest tariff announcement against China came earlier in the week when he asked the U.S. trade representative to identify $200 billion worth of Chinese imports for tariffs. His most recent target for the EU is autos, announcing the U.S. would impose tariffs on car imports if the EU didn’t remove duties on American cars.
Todd Buchholz, former White House economic advisor under President George H.W. Bush, believes timing is key for the Trump administration.
He told “Closing Bell” on Monday that the White House is probably thinking “if you can’t take on China now — when the economy is growing at 4 percent, when unemployment is nearly at record lows — when will you have the wherewithal to do that?”
“Does it take a toll on the economy? Yes. Does it take a toll on the market? Yes,” he added.
However, Trump is someone who made his name in real estate and reality TV programming, said Buchholz, now CEO of educational start-up Sproglit.
“He knows a lot about game theory and this is a game he’s playing. We’re all participants in it, whether we want to or not,” he noted.
Fears of a trade war have been weighing on the stock market. On Monday, the Dow Jones Industrial Average dropped as much as 496 points, while the S&P 500 fell 2 percent before both regained some ground. The Dow ultimately closed more than 300 points lower after Trump trade advisor Peter Navarro told “Closing Bell” there are no plans to restrict foreign investment as part of the administration's trade actions against China or other countries
Shiller said Trump has been supporting the market with his “capitalist tilt.”
“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.”
“This kind of antagonism with our allies I think will eventually harm confidence.”
The new CNBC All-America Economic Survey shows that for the first time since Trump took office, the majority of Americans approve of his handling of the economy.
The survey, released Monday, shows the president’s economic approval rating surged 6 points to 51 percent from the March survey. Just 36 percent of the public disapproved.
