HBR IdeaCast Larry Summers: ‘Smart Businesses Are Going to Maintain Flexibility’
Jul 1, 2025
Larry Summers, former U.S. Treasury Secretary and President Emeritus of Harvard University, shares his insights on navigating economic uncertainty. He discusses how businesses can maintain flexibility amidst challenges like AI advancements and inflation. Summers emphasizes the need for strategic adaptability in response to shifting economic policies and geopolitical tensions. He also critiques U.S.-China trade relations and advocates for gradual trust-building. Lastly, he highlights the importance of a cautious investment approach regarding the transformative potential of AI.
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Tariffs Hurt Competitiveness
- Tariff increases act like a self-inflicted economic wound by raising prices and unemployment simultaneously.
- In aggregate, higher tariffs rarely improve competitiveness or the trade deficit and can aid strategic rivals.
Plan For Multiple Tariff Outcomes
- Maintain flexibility and plan for multiple tariff outcomes in supply chains and investments.
- Build strategies that work reasonably well whether average tariffs end up near 14% or remain lower.
Watch Sentiment Versus Hard Data
- Monitor divergences between sentiment measures and hard economic data when assessing recession risk.
- Pay attention to recent improvements in sentiment as an early sign that a large downturn may be less likely.