Trump Declares US Economy in 'Transition' Amid Intensifying Trade War.
US President Donald Trump has declined to comment on whether the United States economy is experiencing a recession or facing rising prices following his administration's adjustments to tariff threats directed at several key trading partners.
When questioned about the possibility of a recession occurring this year, Trump noted that the country is undergoing a "period of transition."
In contrast, Commerce Secretary Howard Lutnick asserted that the world's largest economy would not face a contraction, although he did recognize that the prices of certain goods might increase.
This statement follows a tumultuous week for US financial markets, as investors navigated the uncertainty stemming from the administration's reversal on several significant aspects of its aggressive trade policies.
New reciprocal tariffs imposed by China, affecting various US agricultural products, took effect on Monday.
In an interview with Fox News, which aired on Sunday but was recorded on Thursday, Trump addressed the recession inquiry by stating, "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," he added.
Last week, the United States implemented new tariffs of 25% on imports from Mexico and Canada, only to exempt a significant number of those products just two days later.
Additionally, President Trump increased the existing blanket tariff on goods from China to 20%. In retaliation, the Chinese government announced new tariffs on certain agricultural imports from the United States.
As of today, specific American agricultural products entering China, such as chicken, beef, pork, wheat, and soybeans, are now subject to tariffs ranging from 10% to 15%.
Han Shen Lin, the China country director at the consultancy firm The Asia Group, remarked on the BBC's Today programme: "You're seeing a lot of tit for tat between both sides to demonstrate that neither side will back off easily.
"That said China has realised it probably can't export its way to GDP growth in the way that it used to so it is focusing a lot more on the domestic economy right now."
The President of the United States has charged China, Mexico, and Canada with insufficient efforts to curb the influx of illegal drugs and migrants into the United States. The three nations have denied these allegations.
Since President Trump initiated a trade conflict with the United States' primary trading partners, stock prices on Wall Street have declined.
Investors are concerned that tariffs may result in increased prices, which could ultimately hinder growth in the largest economy in the world.
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."
Frank Lavin, a former official with the US Commerce Department, expressed to the BBC his belief that the trade war is not expected to spiral out of control. He noted that while Tariffs will eventually "fade a bit" but still be an "extra burden on the US economy,".
Additionally, Rachel Winter, an investment manager at Killik & Co, shared her perspective on the Today programme, indicating that she anticipates a phase of elevated inflation in the United States.
"Tariffs are theoretically inflationary and the level of tariffs that Trump is imposing, I think no doubt, will have to cause inflation somewhere down the line," she said.
President Trump’s tariff policies have introduced significant economic uncertainty, raising concerns about rising prices and potential recession. While the administration claims these measures will bring wealth back to America, the immediate effects have been detrimental. Increased tariffs on goods from China, Mexico, and Canada have led to higher prices for consumers and disruptions in key industries, especially agriculture.
Stock markets have been volatile, and investors are worried about long-term economic consequences. While some officials argue that tariffs will not lead to a recession, the escalating trade war and inflationary pressures indicate a challenging economic outlook for the U.S.
