US President Donald Trump has refused to say whether the US economy is facing a recession or price rises in the wake of his administration’s flip-flopping on tariff threats against some of its closest trading partners.
Asked if he was expecting a recession this year, Trump said there was a “period of transition” taking place.
Commerce Secretary Howard Lutnick, however, insisted there would be no contraction in the world’s largest economy, while acknowledging that the price of some goods may rise.
It comes after a volatile week for US financial markets as investors grappled with uncertainty from his administration’s U-turn on some key parts of its aggressive trade policies.
New tit-for-tat tariffs from China, which target some US farm products, came into effect on Monday.
Speaking to Fox News in an interview broadcast on Sunday but recorded on Thursday, Trump responded to a question about a recession: “I hate to predict things like that. There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing.”
“It takes a little time, but I think it should be great for us,” Trump added.
Last week, the US imposed new 25% tariffs on imports from Mexico and Canada but then exempted many of those goods just two days later.
Trump also doubled a blanket tariff on goods from China to 20%. In response, Beijing announced retaliatory taxes on some imports of agricultural goods from the US.
From today, certain US farm products going into China – including chicken, beef, pork, wheat, and soybeans – face new tariffs of 10 to 15%.
The US president has accused China, Mexico and Canada of not doing enough to end the flow of illegal drugs and migrants into the US. The three countries have rejected the accusations.
Stocks on Wall Street have fallen since Trump sparked a trade war with the US’s top trading partners.
Investors fear tariffs will lead to higher prices and ultimately dent growth in the world’s largest economy.
Speaking on NBC on Sunday, Lutnick said: “Foreign goods may get a little more expensive. But American goods are going to get cheaper”.
But when asked whether the US economy could face a recession Lutnick added: “Absolutely not… There’s going to be no recession in America.”
Former US Commerce Department official, Frank Lavin, told the BBC that he thinks the trade war is unlikely to escalate out of control.
Tariffs will eventually “fade a bit” but still be an “extra burden on the US economy,” he said.
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