​CNBC guest explains how Trump’s ‘magic trick’ EU trade deal is bad for the US economy

BECKY QUICK (CO-HOST): We’re going to talk about trade, tariff agreements, everything that we’ve been hearing this morning. Roger Altman is the founder and senior chairman of Evercore ISI. And Roger, thanks for coming in this morning.

ROGER ALTMAN (EVERCORE ISI FOUNDER): Thanks for having me.

QUICK: We were just looking at some of the energy stocks with Dom that are trading up pretty sharply on what Europe is potentially going to be buying in terms of energy deals from the United States. But it’s not just that. It’s also defense and technology that have done pretty well under this, not just from this agreement, but from the one that’s been potentially struck with Japan as well. What’s your takeaway? 

ALTMAN: Well, that’s true and that’s positive for energy and defense over the medium term. But let’s step back for a minute. So Trump is like a magician at the circus. He thunders, he blusters, he threatens. He sets deadlines. He changes the deadlines. And it’s very dramatic. And then presto, he pulls a 15% tariff deal out of a hat and everybody goes, whew, wow, I thought it was going to be worse. Let’s buy stocks.

Except that it is not good for American consumers and business consumers, because eventually — and that’s not going to take all that long — the tariffs will be passed on, dollar for dollar, to the consumers. And that will mean less consumption, less growth, less jobs and less profit. And right now, it’s hard to see any of this in the data because inventories were increased, many places, to hedge against the tariff impacts. Some places, supply chains were tweaked. And yes, certain producers and retailers are absorbing the tariffs for the time being. But that will not last, and they will — eventually, it’s a certainty — be passed on, and therefore it’s not good for the economy.

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QUICK: Are you more worried about inflation or are you more worried about the slowdown in the economy as a result?

ALTMAN: Well, listen, let’s talk about both. Let’s talk about both. So, pre-Trump, the consensus forecast on GDP growth for ’25 was 2 to 2.5%. Now it’s 1 to 1.5%. Goldman Sachs for example, just out last week, 1.1%. Core PCE looks like it’s going to be about 3% for the second half, up substantially from the consensus. This is not my numbers. This is, you know, really good macroeconomic departments. So you can already see that it’s having a negative effect on growth and a negative effect on inflation. Now, Joe, five years from now we may see some positive impacts on increased U.S. production. And yes, like you said, buying that amount of energy over three years and buying U.S. defense production, those are good things. But net, is this good for the U.S. economy? And the answer is no.