US President Donald Trump on Tuesday acknowledged that his aggressive China trade policies might mean economic pain for Americans, but insisted they are needed for more important long-term benefits.
He contended he does not fear a recession, but is nonetheless considering new tax cuts to promote growth.
Asked if his trade dispute with China could tip the US into recession, Trump brushed off the idea as “irrelevant” and said it was imperative to “take China on.”
“It’s about time, whether it’s good for our country or bad for our country short term,” he said.
Paraphrasing a reporter’s question, Trump said: “Your statement about: ‘Oh, will we fall into a recession for two months?” OK? The fact is somebody had to take China on.”
Trump said that he had no choice but to impose the tariffs that have been a drag on US manufacturers, financial markets and, by some measures, US consumers.
Trump was clear that he did not think the US is at risk of a recession and that a boom was possible if the US Federal Reserve would slash its benchmark interest rate.
“We’re very far from a recession,” Trump said. “In fact, if the Fed would do its job, I think we’d have a tremendous spurt of growth, a tremendous spurt.”
Trump recommended a minimum cut of a full percentage point in the coming months.
Yet he also said he is considering a temporary payroll tax cut and indexing to inflation the federal taxes on profits made on investments — moves designed to stimulate faster growth.
Trump faces something of an inflection point on a US economy that appears to be showing vulnerabilities after more than 10 years of growth. Factory output has fallen and consumer confidence has waned as he has ramped up his trade dispute with China.
In private, Trump and his advisers have shown concern that a broader slowdown, if not an outright recession, could arrive just as he is seeking re-election based on his economic record.
Trump rattled the stock and bond markets this month when he announced a plan to put a 10 percent tax on US$300 billion worth of Chinese imports.
The market reaction suggested that a recession might be on the horizon and led Trump to delay some of the tariffs that were slated to begin next month, although 25 percent tariffs are already in place for US$250 million in other Chinese goods.
Trump has long maintained that the burden of the tariffs is falling solely on China, yet that message was undermined by his statements to reporters on Tuesday prior to a meeting in the Oval Office with Romanian President Klaus Iohannis.
“My life would be a lot easier if I didn’t take China on, but I like doing it, because I have to do it,” Trump said.
Separately, the Chinese Ministry of Foreign Affairs yesterday said it was natural for the US and China to have differences on trade, but the key was to resolve issues through dialogue.
Ministry spokesman Geng Shuang (耿爽) made the comments at a daily news briefing in Beijing.
Additional reporting by Reuters
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