Economist Art Laffer Criticizes Trump's Tariff Policies; NY AG Letitia James Investigates Insider Trading

US • Business • 04/26 14:31
Economist Art Laffer Criticizes Trump's Tariff Policies; NY AG Letitia James Investigates Insider Trading

Economist Art Laffer, known for supply-side economics, criticized Donald Trump's tariff policies but remains hopeful about Trump's negotiation skills leading to freer trade. Meanwhile, New York Attorney General Letitia James is investigating potential insider trading related to Trump's tariff pause, using the Martin Act to examine if Trump's associates profited from advance knowledge. This inquiry adds to the ongoing legal tensions between Trump and James, who previously secured a civil judgment against Trump for misrepresenting his net worth.

Key Updates

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04/26 14:31

Economist Art Laffer Criticizes Trump's Tariff Policies; NY AG Letitia James Investigates Insider Trading

Economist Art Laffer, known for supply-side economics, criticized Donald Trump's tariff policies but remains hopeful about Trump's negotiation skills leading to freer trade. Meanwhile, New York Attorney General Letitia James is investigating potential insider trading related to Trump's tariff pause, using the Martin Act to examine if Trump's associates profited from advance knowledge. This inquiry adds to the ongoing legal tensions between Trump and James, who previously secured a civil judgment against Trump for misrepresenting his net worth.

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Laffer’s Alarm Over Tariffs

Art Laffer, whose economic theories shaped the tax policies of both Ronald Reagan and Donald Trump, did not mince words when discussing the current state of U.S. trade policy. In an interview with Axios, Laffer described the economic environment as the "most scary, in-flux" moment he has ever witnessed, attributing much of the instability to protectionist measures.

"I don't know how anyone looking at the facts could argue that protectionism doesn't create downturns," Laffer said. "The more protectionism there is, the greater the downturn. Reducing tariffs and protectionism causes a boom in the economy."

Laffer specifically warned about the long-term damage tariffs could inflict on global supply chains and production facilities. "Once you screw around with supply chains, production facilities, all of that, it's very hard to reverse that," he noted, calling tariffs a "perverse government response" and "a sure-fire way of causing an economic bust."

Despite his stark warnings, Laffer acknowledged a glimmer of hope, hinging on Trump’s ability to negotiate favorable trade deals. "You will find out whether I'm right to be scared or right to be hopeful probably in 90 days — there's not a lot of time," he said, referencing the administration’s 90-day pause on most tariffs, except those targeting China.

Faith in Trump’s Negotiation Skills

While Laffer’s economic philosophy is fundamentally opposed to protectionism, he expressed confidence in Trump’s ability to leverage tariffs as a negotiating tool. Speaking to Fox News, Laffer described Trump as a "great negotiator" and praised his strategy to use tariffs as a means to dismantle foreign trade barriers.

"But he, boy, he knows how to do these negotiations," Laffer said. "He’s going to eliminate a very serious problem of all these foreign tariffs, and non-tariff barriers and quotas against us, and we are the freest trade country. And now he’s going to bring ‘em back in and really bring down their barriers to trade. And we’re going to have a much freer trade world."

Laffer’s relationship with Trump has been notably supportive over the years. In 2019, Trump awarded Laffer the Presidential Medal of Freedom, recognizing his contributions to economic policy, particularly the "Laffer Curve" theory that influenced major tax cuts during both the Reagan and Trump administrations.

Despite his admiration for Trump’s leadership, Laffer admitted to personal trepidations. "I always have trepidations 'cause I’m a wuss. I’m afraid," he joked during a Fox News interview, underscoring the high stakes involved in the administration’s trade maneuvers.

Letitia James Investigates Insider Trading Allegations

As Trump’s tariff policies continue to stir economic debate, they have also attracted legal scrutiny. New York Attorney General Letitia James has begun a preliminary review into whether insider trading occurred in connection with Trump’s recent decision to pause certain tariffs.

According to Fox News Digital, James is utilizing the Martin Act, a powerful New York statute that grants her office broad authority to investigate securities fraud without needing to prove intent to defraud. The law allows the attorney general to subpoena witnesses, demand documents, and pursue civil or criminal charges.

The inquiry reportedly focuses on whether individuals within Trump’s circle received advance notice of the tariff pause and used that information for financial gain. Senator Elizabeth Warren commented on the matter, stating, "It’s entirely appropriate to have an investigation to make sure that Donald Trump, Donald Trump’s family, Donald Trump’s inner circle, didn’t get advance information and trade on that information."

Additionally, Democratic Senators Adam Schiff and Ruben Gallego sent a letter to White House Chief of Staff Susie Wiles and Trade Representative Jamieson Greer, urging a formal investigation into potential insider trading linked to the tariff announcement.

Political Tensions Surrounding the Investigation

The investigation comes amid a backdrop of longstanding animosity between Trump and James. During her 2018 campaign for attorney general, James pledged to aggressively pursue legal action against Trump, whom she labeled a "con man." Her office later secured a civil judgment exceeding $450 million against Trump for allegedly misrepresenting his net worth, a ruling Trump is currently appealing.

Trump and his allies have responded by promoting allegations against James, including claims that she falsified mortgage documents to obtain favorable loan terms. James has dismissed these accusations as "baseless."

Despite the political overtones, James’ current review remains in its early stages, and no formal charges have been filed. The outcome of the investigation could have significant implications, both legally and politically, as Trump continues to navigate multiple legal challenges while maintaining a prominent role in American politics.

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