Tariff uncertainty has “paralyzed” households and businesses across America, according to Former Treasury Secretary Janet Yellen.

What To Know: The SPDR S&P 500 (NYSE:SPY) has recently seen increased volatility due to continued tariff uncertainty. The Trump administration’s varying signals on tariffs have been “completely chaotic,” Yellen said Monday on CNBC’s “Squawk Box.”

President Donald Trump announced a 90-day tariff pause last week, less than a day after sweeping reciprocal tariffs were enacted.

Over the weekend, the Trump administration announced new tariff exemptions on several consumer electronics including smartphones and computers, which sent futures racing higher. But administration officials signaled on Sunday that fresh tariffs would be coming for the exempted tech products in the coming months.

“Things have been just chaotic,” Yellen said. “The reciprocal tariffs put on, then paused, don’t know what’s going to happen next. This is really creating an environment in which households and businesses feel paralyzed by the uncertainty.”

Related Link: Trump’s Tariffs Could Send Rents Higher, Economist Warns

Yellen, who left the role of Treasury Secretary in January, told CNBC that she has had a few meetings with former counterparts about tariffs.

“I honestly don’t know what to tell them,” she said, adding that it’s “almost impossible” for Americans to plan accordingly for tariffs because no one knows what to expect.

She called the White House’s reciprocal tariff confusion a “huge” self-inflicted wound and equated it to hitting the U.S. economy with a sledgehammer.

Yellen also doesn’t understand Trump’s rationale behind the tariffs. She noted that most economists agree that tariffs are not the right way to reduce the trade deficit. Greater fiscal discipline would be the right approach, the former Treasury Secretary argued.

Moreover, the Trump administration has suggested that the tariffs are an effort to bring manufacturing back to the U.S., but Yellen argued that such is a “pipe dream” and may not even be a desirable goal for the country.

“It’s really hard to predict where this is going. The escalation with China could have very significant global implications,” Yellen said.

The was up nearly 2% in early trading Monday before pulling back amid continued uncertainty. The SPY was up 0.68% at $537.53 at the time of publication, per Benzinga Pro.

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