Yale University economics professor emeritus and Nobel laureate Robert Shiller says President Donald Trump’s tariff policies and abrupt reversals are sowing fear and economic instability—both at home and abroad.
Shiller, known for predicting past economic bubbles, told Connecticut Public Radio the whipsawing trade strategies under Trump have hurt U.S. credibility and created an environment ripe for job loss and recession.
Tariffs and uncertainty erode confidence
“The economic environment right now is already and will continue to cause job loss for many people,” Shiller said. He warned that families may be forced to relocate to keep jobs, and that even those not directly affected by trade shifts could begin cutting spending out of fear.
According to Shiller, this kind of fear—especially when stoked by unpredictable government policy—can become self-reinforcing.
“That destroys their economic confidence,” he said.
Walking back tariffs, but not the damage
Since taking office, President Trump has repeatedly imposed tariffs on foreign goods, only to reduce or delay them later. Shiller said he expects more walk-backs ahead—especially where China is concerned—as part of ongoing negotiations.
But the long-term credibility cost, he said, has already been paid.
“His credibility has been damaged,” Shiller said. “And unfortunately, it damaged the credibility of the United States as being consistent in its attitude toward foreigners.”
Echoes of history
Shiller drew a direct comparison between today’s trade friction and the events leading up to World War II. He cited the Smoot-Hawley Tariff Act of 1930, which many economists blame for deepening the Great Depression and worsening global instability.
“That led to the election of Adolf Hitler in ’33,” Shiller said. “It might have been behind the beginning of World War II.”
He added that today’s citizens, aware of such history, naturally worry when international cooperation appears to fray.
Advice to state legislators: Prepare to spend
Asked what state lawmakers should do to brace for what he sees as an economic storm, Shiller urged a proactive stance—even if that means borrowing in the short term.
“They’re supposed to borrow money in times of crisis,” he said. “I would say that we may be entering such a time.”
He added that for states lucky enough to have a surplus, like Connecticut, now may be the time to responsibly draw from it to stabilize services and support struggling residents.
An uncertain road ahead
Shiller’s message was clear: While economic forecasting is difficult under any circumstances, the current climate—marked by unprecedented shifts in federal policy and rhetoric—is particularly fraught.
“We’ve never seen such wild changes in tax rates,” he said.
Whether those shifts turn into a full-blown economic crisis remains to be seen. But for now, Shiller says both governments and citizens would be wise to act as if the storm is coming.
