Her comments at the Wall Street Journal's CEO Council Summit come as Trump has vowed broad tariffs of at least 10 percent on all imports, and higher rates on goods from China, Canada and Mexico.
Imposing broad-based tariffs could "raise prices significantly for American consumers and create cost pressures on firms" which rely on imported goods, Yellen said when asked about Trump's plans.
She cautioned that this could weigh on the competitiveness of certain sectors and increase costs to households.
"This is a strategy I worry could derail the progress that we've made on inflation, and have adverse consequences on growth," she said.
But she defended efforts by President Joe Biden's administration to impose targeted tariffs on Chinese goods to counter unfair trade practices by Beijing.
She has previously raised concern over China's industrial overcapacity -- which risks a flood of underpriced goods into global markets and could undermine the development of key US industries.
On Tuesday, Yellen also expressed regret that the United States has not made more progress on the country's deficit, saying she believes it "needs to be brought down, especially now that we're in an environment of higher interest rates."
She stressed the importance of an independent Federal Reserve too, saying that countries perform better economically when central banks are allowed to exercise their best judgment without political influence.
Trump has said that he would like "at least" a say over setting the Fed's interest rate.
"I think it's a mistake to become involved in commenting on the Fed and certainly taking steps to compromise its independence," said Yellen.
"I believe it tends to undermine the confidence of financial markets and, ultimately, of Americans in an important institution," she added.
Yellen noted that she has spoken with Trump's Treasury chief nominee, billionaire hedge fund manager Scott Bessent, congratulating him on his nomination.
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