Trump says US economy in 'transition' as trade war escalates

U.S. President Donald Trump recently declined to explicitly state whether the U.S. economy faces the risk of recession or rising prices. Previously, the Trump administration's repeated changes in stance on tariff threats against some of its closest trading partners have sparked market concerns. These uncertainties have made economic forecasting all the more difficult.

When asked if he anticipates a recession this year, Trump said that it is currently a "transition period." However, U.S. Commerce Secretary Howard Lutnick insisted that the world's largest economy will not shrink, but also acknowledged that the prices of some goods may rise. This divergence in opinion adds to the overall economic uncertainty.

U.S. financial markets experienced a turbulent week as investors grew uneasy about the Trump administration's capriciousness on some key trade policies. A new round of retaliatory tariffs by China targeting U.S. agricultural products is set to take effect on Monday. These tariffs further exacerbate trade tensions and market volatility.

In response to questions about a recession during a Fox News interview (which aired on Sunday but was recorded on Thursday), Trump said: "I don't like predicting those things. We're in a transition period because we're doing things that are so important. We're bringing wealth back to the United States. It's a big thing." He added, "It takes a little time, but I think it should be good for us." His remarks suggest a long-term vision despite short-term economic anxieties.

Last week, the U.S. imposed high tariffs on imports from Mexico and Canada, but then exempted many of those goods from tariffs just two days later. U.S. stock markets have been falling since the Trump administration instigated trade wars with major U.S. trading partners. Investors are worried that tariffs will lead to higher prices and ultimately hurt the growth of the world's largest economy. This concern reflects the potential negative impact of protectionist trade policies.

Lutnick said on NBC on Sunday that "foreign goods may get a little bit more expensive, but American goods will get cheaper." But when asked if the U.S. economy might face a recession, Lutnick added: "Absolutely not... There is not going to be a recession in the United States." He emphasized the strength and resilience of the American economy.