US President Donald Trump has refused to confirm whether the US economy is headed for a recession amid escalating trade tensions with key partners. In a recent interview, Trump described the current state of the economy as a “period of transition,” adding that the aggressive measures being taken are aimed at bringing wealth back to America.
When asked about the possibility of a recession, Trump stated, “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.” Meanwhile, Commerce Secretary Howard Lutnick insisted that there would be no contraction in the world’s largest economy, even though he acknowledged that some goods might see price increases.
The debate over the economic outlook follows a volatile week for US financial markets. Investors have been grappling with uncertainty after the administration’s sudden policy U-turns on several key trade measures. Recently, the US imposed new 25% tariffs on imports from Mexico and Canada, only to exempt many of these goods just two days later. Additionally, Trump doubled a blanket tariff on goods from China to 20%, prompting Beijing to retaliate with new tariffs of 10 to 15% on several US farm products including chicken, beef, pork, wheat, and soybeans.
Industry experts have noted that this tit-for-tat exchange is designed to show that neither side will back down easily. Han Shen Lin, China country director at The Asia Group, told 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.”
While some investors fear that these escalating tariffs will lead to higher consumer prices and potentially slow economic growth, others, like former Commerce Department official Frank Lavin, believe that the impact will eventually diminish. Investment manager Rachel Winter also warned of a period of higher inflation, noting that tariffs are theoretically inflationary.
Amid these developments, Trump has also accused China, Mexico, and Canada of failing to stem the flow of illegal drugs and migrants into the US—a claim that has been rejected by the three nations. Despite the ongoing trade tensions, Lutnick remains optimistic, saying, “Foreign goods may get a little more expensive. But American goods are going to get cheaper. Absolutely not… There’s going to be no recession in America.”
