U.S. President Donald Trump’s commerce secretary says sweeping tariffs on foreign goods will be “worth it” even if they push the American economy into a recession.
Yet Howard Lutnick told CBS News in an interview that aired Tuesday night that he doesn’t expect a recession to occur, despite a growing number of economists raising concerns.
“These policies are the most important thing America has ever had,” he said when asked if a recession is worth the risk.
“So it is worth it,” interviewer Nancy Cordes asked in response.
“It is worth it,” Lutnick replied, adding quickly: “The only reason there could possibly be a recession is because of the Biden nonsense that we had to live with.”
J.P. Morgan’s chief economist told reporters on Wednesday there was about a 40 per cent chance of a U.S. recession this year, up from the investment bank’s last official forecast of around 30 per cent, due to “heightened concern” about the economy.
Bruce Kasman said the recession risk would rise, probably to 50 per cent or above, if reciprocal tariffs that Trump has threatened to impose starting April 2 were to meaningfully come into force.
“If we would continue down this road of what would be more disruptive, business-unfriendly policies, I think the risks on that recession front would go up,” Kasman said.
Morgan Stanley and Goldman Sachs also downgraded their 2025 economic growth forecasts for the U.S. last week, with Goldman Sachs raising its own recession probability rating to 20 per cent from 15 per cent. Both banks cited tariffs in their revised reports.
Lutnick, echoing Trump, has blamed past economic policies and inflation under former U.S. president Joe Biden for the overall downturn in financial markets that began last week, when tariffs on Canada and Mexico took effect.
Trump has since announced exemptions for North American automakers and other goods that fall under free trade rules, and imposed new universal duties on steel and aluminum that took effect Wednesday, adding further uncertainty for businesses and investors.
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Tuesday saw further volatility after Trump threatened to double steel and aluminum tariffs to 50 per cent for Canada after Ontario imposed an export tax on electricity sold to U.S. states and said exports could be cut off entirely, only for both sides to back down by the end of the day.
Consumer confidence and inflation forecasts have also cooled since Trump’s trade wars began, which Lutnick said was Biden’s fault and did not reflect Trump’s decisions.
“I’m sorry that Biden left us horrible numbers,” he said. “I’m sorry Donald Trump can only fix them when he’s in office. You can try to pin them with before he was in office, I get it. It’s nonsense.
“Let Donald Trump’s policies reign, and you will see at the end of the year the greatest set of resurgence and growth and building in the United States of America.”
Lutnick further dismissed questions about a possible recession and inflation risk in an interview with Fox Business on Wednesday.
“Inflation comes from a government printing too much money,” he said. “You don’t get inflation from having a tariff, because what a tariff says is if it’s made in Europe, if it’s made foreign, it might cost a little more, but that which is made in America does not cost more.”
He claimed more steel and aluminum plants would be built in America to meet domestic demand, but he did not say how long that would take.
In the White House on Wednesday, Trump pushed back on suggestions that his on-and-off tariff policies and exemptions were causing “inconsistency” for businesses that’s leading to the market turmoil.
“I have the right to adjust,” he said. “I was called by the automakers [General Motors, Stellantis and Ford] and they asked me to do them a favour — could I delay it for a period of four weeks so that they’re not driven into a bit of a disaster for them.
“It’s called flexibility.”
Ontario Premier Doug Ford and federal Finance Minister Dominic LeBlanc are set to travel to Washington on Thursday to meet with Lutnick and other Trump administration officials at the White House.
Lutnick told Fox he expects the conversation will be an opportunity to “lower the temperature” with Canada — language LeBlanc also used when speaking to reporters alongside Ford in Toronto on Wednesday.
Ford also said he wants an end to the frenetic tariff back-and-forth.
“I want to find out where their bar is set,” he said. “Rather than keep moving the goalpost, I want to find out how quickly you want to move forward and see what their requirements are” for renegotiating the Canada-United States-Mexico Agreement (CUSMA), which could address tariff levels.
Lutnick added to Fox that the Trump administration will wait to negotiate with “the rest of Canada” until after the next federal election, which could be called quickly after new Liberal Leader Mark Carney is sworn in as prime minister.
Carney is expected to be sworn in on Friday.
Carney said in Hamilton on Wednesday that he’s ready to meet with Trump if he shows “respect for Canadian sovereignty” and is willing to take “a common approach, a much more comprehensive approach for trade.”
“We firmly believe that in a world fraught with geopolitical and economic uncertainties, it is not in our common interest to burden our economies with tariffs,” he said.
— with files from Reuters and The Canadian Press
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