Trump admits trade war may hurt Americans and says he is considering new tax cuts

“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,” US president says

(AP)

Donald Trump has acknowledged that his aggressive stance on trade with China may inflict economic pain on Americans but argued it is needed to reap long-term benefits.

He also made clear he doesn’t think the nation is at risk of a recession but he is nonetheless considering new tax cuts to promote growth.

Asked if his trade war with China could tip the US into recession, Mr 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, Mr 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.”

The president indicated that he had no choice but to impose the tariffs that have been a drag on US manufacturers, financial markets and, by some measures, American consumers.

But an economic boom is possible, he claimed, if the Federal Reserve slashes its benchmark interest rate.

“We’re very far from a recession,” Mr Trump said. “In fact, if the Fed would do its job, I think we’d have a tremendous spurt of growth, a tremendous spurt.”

Yet he also said he is considering a temporary payroll tax cut, as well as linking taxes on profits from asset sales to inflation, which would result in lower taxes. He downplayed any idea that these thoughts suggest the economy is weakening, saying: “I’m looking at that all the time anyway.”

Asked about his remarks, White House spokesman Judd Deere said: “The president does not believe we are headed for a recession. The economy is strong because of his policies.”

The US economy appears to be showing vulnerabilities after more than 10 years of growth. Factory output has fallen and consumer confidence has waned as Mr Trump has ramped up his trade war with China. In private, Mr 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.

Mr Trump rattled the stock and bond markets this month when he announced plans to put a 10 per cent tax on $300bn worth of Chinese imports. The market reaction suggested a recession might be on the horizon and led Mr Trump to delay some of the tariffs that were slated to begin in September, though 25 per cent tariffs are already in place for $250m in other Chinese goods.

The president 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 the president of Romania.

“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,” Mr Trump said.

AP