Market concerns: Trump speaks from the Oval Office of the White House in Washington. The US president says tariffs could be imposed on Canadian dairy and lumber products within days in a growing trade war with the country’s northern neighbour. — AFP
WASHINGTON: President Donald Trump has declined to predict whether the United States could face a recession amid stock market concerns about his tariff actions on Mexico, Canada and China.
The Republican president, whose trade policies have rekindled fears of worsening US inflation, was asked if he expected a recession this year in a Fox News interview broadcast on Sunday.
“There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America,” Trump told the Sunday Morning Futures programme.
“It takes a little time, but I think it should be great for us.”
Tariffs have been one key concern for investors, as many believe they can harm economic growth and be inflationary.
While Trump acknowledged as early as Feb 2 that his sweeping tariffs could cause some “short-term” pain for Americans, his own advisers have repeatedly downplayed any negative impact.
“Absolutely not,” Commerce Secretary Howard Lutnick said on Sunday. “There’s going to be no recession in America.”
Lutnick did acknowledge that the Trump tariffs would lead to higher prices for US consumers on some foreign-made goods, but said American products will get cheaper.
“He’s not going to step off the gas,” Lutnick said on NBC’s Meet the Press.
Trump imposed new 25% tariffs on imports from Mexico and Canada last Tuesday, along with fresh duties on Chinese goods, after he declared the top three US trading partners had failed to do enough to stem the flow of fentanyl and its precursor chemicals into the United States.
Two days later, he exempted many imports from Mexico and some from Canada from those tariffs for a month, the latest twist in a fluctuating trade policy that has whipsawed markets and fanned worries about US inflation and growth.
It was the second time in two months that Trump has walked back tariffs on the US neighbours.
“If fentanyl ends, I think these will come off. But if fentanyl does not end, or he’s uncertain about it, he will stay this way until he is comfortable,” Lutnick said.
White House officials said Canada and Mexico are conduits for shipments of fentanyl, which is 50 times more potent than heroin, and its precursor chemicals into the United States in small packages that are often not inspected.
Public data shows 0.2% of all fentanyl seized in the United States comes from the Canadian border, while the vast majority arrives via Mexico.
In a concession to Trump, Canada appointed a new fentanyl czar last month.
The exemptions for the two largest US trading partners expire on April 2, when Trump has threatened to impose a global regime of reciprocal tariffs on all US trading partners.
Kevin Hassett, director of the White House’s National Economic Council, said on ABC’s This Week that he hoped the drug-related tariffs could be resolved by the end of the month.
Seesaw tariff announcements have unnerved Wall Street as investors said flip-flopping moves by the Trump administration to roll back levies on trading partners are causing confusion rather than bringing relief.
The Trump trade policies have raised fears of trade wars that could slam economic growth and raise prices for Americans still smarting from years of high inflation.
China said it would “resolutely counter” pressure from the United States on the fentanyl issue after Trump imposed tariffs of 20% on all imports from China.
Democratic senators from two border states criticised Trump’s tariff policy as inconsistent and irresponsible.
Chaotic feeling
“These broad, indiscriminate and on-again, off-again tariffs don’t help anyone. They don’t help farmers. They don’t help auto workers. They’re a mistake,” US Senator Adam Schiff of California said on ABC.
“Pounding Canada as if they’re the exact same thing as China – it just creates this chaotic feeling,” US Senator Elissa Slotkin, of Michigan, said on NBC.
Trump said he put a hold on tariffs on some goods last week because, “I wanted to help Mexico and Canada,” according to the Sunday Morning Futures interview, which was taped last Thursday.
The three countries are partners in a North American trade pact that was renegotiated by Trump during his first White House term.
Yet Trump also told the Fox News programme that those 25% tariffs “may go up” and he said last Friday that his administration could soon impose reciprocal tariffs on Canadian lumber and other products.
Separately, US tariffs of 25% on imports of steel and aluminum will take effect as scheduled tomorrow, Lutnick said during the interview.
Canada and Mexico are both top exporters of the metals to US markets, with Canada in particular accounting for most aluminum imports. — Reuters
