Early Signs Point To Us Economy Heading For A Recession

While US President Donald Trumps ratings graph continues to trend down, the price of goods is heading in the opposite direction, indicating the possibility of a recession in what is supposed to be the worlds biggest economy.

Trump, though, is non-committal about the relationship between a struggling economy, a depressed consumer market and the possible impact tariffs may be having on his country.

Pressed about flickers of a recession on the horizon, the businessman-turned-president, who believes in prosperity through protectionism, wouldnt mention the dreaded r-word, electing instead to say that the US is finding itself in a period of transition.

Commerce Secretary Howard Lutnick was a bit more forthright, saying there would be no contraction in the world's largest economy.

However, he acknowledged that the price of some goods might rise on the back of import prices going up.

The latest developments follow a volatile week for US financial markets as investors grapple with uncertainty from the administration's U-turn on some key parts of its aggressive trade policies.

New tit-for-tat tariffs from China, targeting some US farm products, came into effect on Monday.

In an interview broadcast on Sunday but recorded on Thursday, Trump responded to a question about a recession by saying that he hated to predict such things.

He explained that there was a period of transition because what they were doing was very significant, involving bringing wealth back to America. He added that it would take a little time, but he believed it should ultimately be beneficial for the US.

Last week, the US imposed new 25 tariffs on imports from Mexico and Canada, but then exempted many of those goods just two days later. Trump also doubled a blanket tariff on goods from China to 20. In response, Beijing announced retaliatory taxes on some imports of agricultural goods from the US.

From today, certain US farm products entering China, including chicken, beef, pork, wheat and soybeans, face new tariffs of 10-15.

Han Shen Lin, China country director at consultancy firm The Asia Group, told the BBC's Today programme that there was a lot of tariff retaliation between his country and the US as both wanted to make it clear there wouldnt be easy back-pedalling.

He said China had realised it probably could not export its way to GDP growth as it used to, so it was focusing more on the domestic economy.

Trump has accused China, Mexico and Canada of not doing enough to end the flow of illegal drugs and migrants into the US, a claim that has been rejected by all three.

Stocks on Wall Street have fallen since Trump sparked a trade war with the US's top trading partners.

Investors fear tariffs will lead to higher prices and ultimately dent growth in the US.

Speaking on NBC on Sunday, Lutnick said that foreign goods might become a little more expensive, but American goods would get cheaper. When asked whether the US economy could face a recession, he replied that there would absolutely be no recession in America.

Former US Commerce Department official Frank Lavin told the BBC that he thought the trade war was unlikely to escalate out of control. He noted that tariffs would eventually 'fade a bit' but would still be an extra burden on the US economy.

Rachel Winter, investment manager at Killik Co, told Today that she believed the US was likely to experience a period of higher inflation. She explained that tariffs were theoretically inflationary, and that the level of tariffs being imposed by Trump would undoubtedly lead to inflation at some point.