Yellen Says Trump ‘Appalling’ on US Allies, Backs Retaliation

Former Treasury Secretary Janet Yellen criticized President Donald Trump’s treatment of US allies, and backed the idea of retaliation for protectionist moves.

“I think it’s appalling, and I understand exactly why you feel betrayed by the United States and are so angry about it,” Yellen said in response to a question from former Canadian Finance Minister Chrystia Freeland about Trump’s tariffs on its partners and efforts to “monetize” US security relationships with allies.

Trump declared a raft of new tariffs last year on US trading partners, most of which were declared illegal by the Supreme Court in February. The administration has been constructing a new system of levies using other legal bases, in an initiative officials say is aimed at addressing longstanding unfairness in the global trading system that had disadvantaged American producers. Trump lately has criticized Canada and others for having “taken advantage” of the US.

Yellen, who served as Treasury secretary under former Democratic President Joe Biden, said she believed “it’s important for Canada and other countries not to accept this lying down and to retaliate.”

She spoke in an interview for Bloomberg Television’s Wall Street Week that spanned a range of issues, including her efforts on global corporate-tax coordination.

During her own term in office, Yellen had championed “friendshoring” — deepening trade ties with allies and other partners, such as India and Vietnam, to diversify supply chains away from China and other geostrategic rivals.

Read more: Yellen Takes Friendshoring Case to India in Push Against China

Current Treasury Secretary Scott Bessent has sought to corral Group of Seven nations, along with a number of others, into developing a strategic mineral supply chain that’s independent of China, while stopping short of Yellen’s broader friendshoring initiative. He’s also made critical statements about some allies, referring to Canada as having tried to have the benefits of being a US state without beng one.

Trump’s tariffs have added to inflationary pressures since early last year, while bolstering the Treasury’s revenues. Trump and Bessent argue that they will help induce a domestic manufacturing renaissance. Yellen said they are fundamentally against US interests.

“We have lost a great deal from the tariffs, especially at a time when affordability is an overriding concern of Americans — they feel they can’t make ends meet. The tariffs have only made that worse,” she said.

Tariff Impact

Bloomberg Economics estimates the current US effective tariff rate at 11.2%, which marks an almost 9 percentage point increase from the start of January 2025. The Tax Policy Center, a research group, said last month that levies announced by the administration will impose an average burden this year of about $920 per American household.

On the security side, Yellen said Trump was “undermining or even weaponizing our alliances.” She didn’t offer specifics. Among its inititiatives, the administration has pushed Japan and South Korea, both treaty allies with the US, into large-scale investment pledges.

Yellen, who also served as Federal Reserve chair earlier in her career, made a case for US collaboration with other nations to address challenges to the global trading system posed by China. Beijing “didn’t really always play by the rules,” massively subsidizing its industries and keeping consumption at relatively low levels.

“The only way we can be successful in dealing and confronting China with these concerns is if we all act in unison,” Yellen said. She said her view was, “we are large enough — the democracies of the world, the countries that would be involved in friendshoring — that we’re a significant enough portion of the world to be able to make progress in dealing with these issues with China.”

She added, “Although the United States put in place its own export controls and investment controls it can’t be successful unless a group of allies work together.”

Bessent has also urged Western allies to work with the US to counter China’s industrial policies. He said at an event Monday he’d spoken that day with a European counterpart about China, and anticipated Europeans will also likely take “very strong action” against Beijing.