Billionaire investor Ken Griffin cautioned that President-elect Donald Trump's proposed tariffs could lead the U.S. down a dangerous path toward crony capitalism, jeopardizing long-term economic competitiveness, CNBC reported.

Speaking Thursday at the Economic Club of New York, the Citadel founder and CEO expressed concerns about the protectionist trade policies central to Trump's economic agenda.

"I am gravely concerned that the rise of tariffs puts us on a slippery slope towards crony capitalism," Griffin said. He noted that while some domestic companies might benefit in the short term by seeing foreign competitors removed, the long-term effects would likely weaken corporate America and harm economic productivity.

Crony capitalism, Griffin explained, occurs when businesses rely on close ties with government officials to maintain their competitive edge rather than improving through innovation and efficiency.

"Those same companies that enjoy that momentary sugar rush of having their competitors removed from the battlefield soon become complacent," he said. "They become less competitive on both the world stage and in meeting the needs of the American consumer."

Trump's proposed tariffs include a universal 20% levy on all imports and a steeper 60% tariff on goods from China. The plan aims to protect domestic industries but has drawn criticism for potentially raising production costs and consumer prices at a time when global economies are still recovering from inflationary pressures.

Griffin cautioned that such policies could incentivize lobbying and political favoritism, exacerbating inefficiency in the marketplace.

"Now you're going to find the halls of Washington really filled with the special interest groups and the lobbyists as people look for continued higher and higher tariffs to keep away foreign competition," he said.

"It protects inefficient American businesses that have failed to meet the needs of the American consumer."

While his remarks on tariffs dominated the discussion, Griffin also addressed Citadel's future, stating that he has no immediate plans to take Citadel Securities public. Founded in 2002, Citadel Securities is a market-making firm that has grown rapidly under Griffin's leadership.

"We're focused on building the business, on investing in our future. And we do believe that there are benefits to being private during this period of very, very rapid growth," Griffin said.

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