Business Reporter, BBC News
Getty imagesUS President Donald Trump refused to say if the US economy faces a recession or an increase in prices following changes in his administration to tariff threats against some of his closest business partners.
When asked if he expected a recession this year, Trump said there was a “transition period”.
The Secretary of Commerce, Howard Lunick, however insisted that there would be no contraction in the greatest economy in the world, while recognizing that the price of certain goods could increase.
It comes after a volatile week for the American financial markets, investors being struggling with the uncertainty of the inclination of its administration on certain parts of its aggressive commercial policies.
The new Tit-For-Tat prices from China, which target certain American agricultural products, entered into force on Monday.
Addressing Fox News in an interview broadcast on Sunday but recorded Trump on Thursday, answered a question on a recession: “I hate predicting things like that. There is a period of transition because what we do is very big. We bring wealth in America. It is a great thing.”
“It takes a little time, but I think it should be great for us,” he added.
Last week, the United States imposed new prices of 25% on imports from Mexico and Canada, but then exempted many of these goods two days later.
Trump has also doubled a coverage rate on Chinese goods at 20%. In response, Beijing has announced reprisal taxes on certain imports of agricultural goods in the United States.
From today, certain American agricultural products going to China – including chicken, beef, pork, wheat and soy – face new tariffs of 10 to 15%.
Han Shen Lin, Director of the Pays de la China at the consulting firm The Asia Group, told the BBC TODAY program: “You see a lot of TAT for the two parties to demonstrate that none of the parties will easily retire.
“That said, China has realized that it probably couldn’t export its way to GDP growth in the way it was doing so that it focuses much more on the domestic economy right now.”
The American president accused China, Mexico and Canada not to do enough to end the flow of illegal drugs and migrants in the United States. The three countries have rejected the accusations.
Wall Street’s actions fell since Trump sparked a trade war with the best business partners in the United States.
Investors fear that prices will lead to higher prices and, ultimately, the growth of the greatest economy in the largest economy in the world.
Speaking on NBC on Sunday, Lutnick said: “Foreign products can become a little more expensive. But American products will become cheaper”.
But when asked if the American economy could face a recession that Lutnick added: “Absolutely not … there will be no recession in America.”
The former head of the US trade department, Frank Lavin, told the BBC that he thought that the trade war is not very likely to become uncontrollable.
The prices will end up “a little” but will always be an “additional burden for the American economy,” he said.
Rachel Winter, director of investments at Killik & Co, told the Today program that she thought that the United States was likely to have a higher inflation period.
“The prices are theoretically inflationary and the level of prices that Trump imposes, I undoubtedly think, it will be necessary to provoke inflation somewhere,” she said.
