US President Donald Trump has characterized the current state of the American economy as being in a “period of transition” rather than facing recession, despite escalating trade tensions with major partners, including China, Canada, and Mexico.
In an interview with Fox News broadcast Sunday, Trump refused to address recession concerns directly, stating, “I hate to predict things like that. There is a transition period because what we’re doing is very big. We’re bringing wealth back to America.”
The comments come as new Chinese tariffs targeting US agricultural products took effect Monday. The tariffs retaliate against the Trump administration’s decision to double tariffs on Chinese goods to 20% and impose new 25% tariffs on imports from Canada and Mexico—many of which were quickly rolled back after significant pushback.
Commerce Secretary Howard Lutnick attempted to assuage concerns, telling NBC, “Foreign goods may get a little more expensive. But American goods are going to get cheaper.” He firmly rejected recession concerns, stating, “Absolutely not… There’s going to be no recession in America.”
However, financial markets have reacted with volatility to the administration’s shifting trade policies, with Wall Street stocks declining amid investor uncertainty. Experts warn of potential inflationary pressures and economic contraction risks.
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 realized 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 administration has accused China, Mexico, and Canada of failing to adequately address illegal drug trafficking and migrant flows into the US, allegations all three nations have firmly rejected.
Investment manager Rachel Winter of Killik & Co. expressed concern about inflationary impacts, stating, “Tariffs are theoretically inflationary. The level of tariffs that Trump is imposing, I think no doubt, will have to cause inflation somewhere down the line.”
Former US Commerce Department official Frank Lavin suggested the trade war may de-escalate, stating, “Tariffs will eventually fade a bit but still be an extra burden on the US economy.”
As the trade war evolves, Americans face rising prices on imported goods while businesses navigate complex supply chain adjustments. The long-term economic impact remains uncertain, but economists warn of potential stagflation risks if current policies persist through 2025.
