US President Donald Trump has declined to comment on whether the US economy is heading toward a recession or experiencing price increases due to his administration’s shifting tariff policies. When asked if a recession was on the horizon, Trump described the current economic situation as a “period of transition” but avoided offering a clear answer.
Commerce Secretary Howard Lutnick, however, reassured the public, stating that the US economy would not contract, although he did acknowledge that some goods might see price hikes.
This uncertainty follows a turbulent week for US financial markets, where investors were rattled by Trump’s administration’s sudden policy reversals on trade. These shifts include the introduction of new tariffs on imports from Mexico and Canada and changes in the tariff approach to China.
Starting Monday, new Chinese tariffs of 10-15% were applied to select US farm products, such as chicken, beef, pork, and soybeans. The tariffs come as part of an escalating trade war between the two countries, marked by retaliatory moves, including China’s taxes on US agricultural goods.
During an interview with Fox News, Trump responded to questions about a potential recession by saying, “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.” He added that the long-term effects should be “great for us,” even though the process may take time.
Meanwhile, Lutnick remained confident, saying, “Absolutely not… There’s going to be no recession in America,” but acknowledged that foreign goods may become more expensive due to the tariffs. He emphasized that American-made products would become cheaper as a result.
Last week, the US imposed a 25% tariff on imports from Mexico and Canada, only to reverse course and exempt many of these goods just two days later. Trump also increased tariffs on Chinese goods to 20%, sparking retaliatory tariffs from Beijing.
China’s response has included new tariffs on US farm products, highlighting the growing tension between the two nations. Han Shen Lin from The Asia Group stated that the back-and-forth between both sides shows neither is willing to back down, though China is increasingly focusing on its domestic economy to spur growth.
Experts remain divided on the economic impact. While some, like Lutnick, believe the US will avoid a recession, others, such as investment manager Rachel Winter, predict that the tariffs will lead to higher inflation. Former Commerce Department official Frank Lavin also believes the trade war may not escalate drastically, but warned that tariffs would continue to weigh on the US economy over time.
