Citadel’s Ken Griffin Says Trump Tariffs Could Lead to Crony Capitalism

Citadel CEO Ken Griffin has issued a warning against the high tariffs that President-elect Donald Trump has pledged to implement, saying crony capitalism could be a consequence.

“I am deeply concerned that rising tariffs put us on a slippery slope toward crony capitalism,” the billionaire investor said Thursday at the Economic Club of New York.

The Citadel founder said domestic companies could benefit in the short term from competitors withdrawing. In the longer term, however, it hurts U.S. businesses and the economy more as they lose competitiveness and productivity, he said.

Crony capitalism is an economic system marked by close, mutually beneficial relationships between business leaders and government officials.

“These same companies that are profiting from this momentary sugar rush of seeing their competitors removed from the battlefield quickly become complacent, quickly take their new economic superiority for granted and, frankly, they become less competitive both on the global stage and less competitive to meet the needs of the American consumer,” Griffin said at the event.

Trump made universal tariffs a central tenet of his economic campaign pitch, imposing a 20% levy on all imports from all countries, with a particularly harsh rate of 60% for Chinese goods.

Protectionist trade policy could make it more expensive to produce goods and raise consumer prices, just as the world recovers from the pandemic’s inflation spikes.

“Now you’re going to find the halls of Washington really filled with special interest groups and lobbyists as people seek ever-higher tariffs to keep out foreign competition and to protect inefficient American companies that don’t have successful in meeting the needs of the American consumer,” Griffin said.

At the same event, Griffin also said he has no plans to take Citadel Securities public in the near future. Citadel is a market maker founded by Griffin in 2002.

“We’re focused on growing the business and investing in our future. And we think there are benefits to being private during this period of very, very rapid growth,” he said .