Harvard Economists Warn of Risks from Trump’s Economic Policies

Leading Harvard economist Jason Furman ’92 said he is concerned that the Trump administration’s attempts to influence the Federal Reserve could harm the U.S. economy beyond the next four years.

“I’m personally nervous about the independence of the Federal Reserve under Donald Trump,” Furman said, warning that the independent body could be turned into a “partisan football” in the future.

Furman spoke at a Monday afternoon panel hosted by the Harvard Kennedy School, alongside Economics professor Carmen M. Reinhart and research fellow Edoardo Campanella. The trio discussed the recent decline in the stability of the American dollar and the broader economic implications of Trump’s policies.

Furman has been a vocal critic of the administration’s economic policies since Trump returned to the White House in January. He said Trump’s broad use of executive power to dictate economic policies sets a dangerous precedent.

“The expansion of executive power we’ve seen the last few months — it’s possible a Democrat would come in and say, ‘That was too excessive, I want to return things,’” he said. “It’s possible they’ll be like, ‘Heck yeah, I love everything Donald Trump did — I just want to do the Democratic version of it.’”

Just last week, Trump asked the Supreme Court to remove Federal Reserve Governor Lisa Cook, a Biden appointee. If successful, Trump would have a majority of appointees on the board — opening the door for more aggressive cuts to interest rates.

Furman also raised concerns about Trump’s trademark tariff policies and their impact on the American dollar.

When asked whether the American dollar has a stable future, Furman offered a short answer: “I don’t know.”

“The tariffs we have right now are just much, much higher than anyone expected,” he said. “They went from an average tariff rate of 3 percent last year to what is now an average tariff rate of 18 percent — and most people were thinking maybe it would go from three to eight.”

Reinhart agreed, noting the “lack of confidence, uncertainty” around the short-term stability of the dollar.

“I don’t know whether the weakness will catapult into something bigger, or whether it will be a temporary flux,” she said. “I think Jason is wise to lay out that, in effect, currency movements are one of the things that are least predictable.”

Campanella, who studies globalization and capitalism, echoed his colleagues’ remark in an interview after the forum.

“I think there is consensus that the dollar is facing a sort of, not really confidence crisis, but certainly investors are no longer as confident in the value of the dollar as they were just a year ago,” Campanella said.

Still, Furman expressed optimism about the dollar’s long-term strength. “The dollar will be a very important global currency for the foreseeable future,” he said.

—Staff writer Yahir Ramirez can be reached at yahir.ramirez@thecrimson.com.