“I don’t Want Prices to Go Higher”: Trump Signals Tariff Retreat as Economic Fallout Fuels Inflation and Recession Fears
In a surprising change, President Donald Trump hinted on Thursday that he could interrupt other tariff increases on China, recognizing that climbing tasks could stifle consumers’ expenses and damage the American economy.
Addressing journalists from the Oval Office, Trump said: “At some point, I don’t want them to go higher because at some point, you do it where people do not buy.”
His words mark a rare entry of the economic assessment that his trade war is demanding, because inflation is potentially overvoltage and that economists warn against an imminent recession. With the markets in shock and the climbing of consumer prices, Trump seems to be struggling with the consequences of a policy that has triggered global reprisals and a domestic discomfort, which raises questions about the sustainability of its “America First” program.
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Trump’s tariff offensive began with a fulfillment on April 2, nicknamed “Liberation Day”, when he imposed an obligation of 10% on almost all American imports and targeted 90 nations with reciprocal samples. On April 9, the prices on Chinese products, which represent $ 143.5 billion in American annual exports, climbed to 145%, intensifying a trade war with the second world economy.
This decision, intended to relaunch American manufacturing and finance tax reductions, rather sparked a wave of involuntary consequences. Consumer prices are increasing – increasing by 17%, foods up almost 3% and vehicles up more than 8% – while businesses have repercussions in prices, which act as a tax on American importers. Economists believe that these tasks could reduce the purchasing power of households by $ 2,100 per year, pushing inflation around 4% in summer and threatening consumption expenditure which leads 70% of American economic growth.
Economic warning panels are undoubtedly. The S&P 500 lost nearly 6 billions of dollars in value in early April, with a record of 4.8% on April 3, while investors were preparing for a slowdown led to the price. Retailers like Walmart report the cost increase, while Delta Air Lines notes a stand in travel requests, with hotels and air ticket sales that have weakened. Consumers, pressed by higher prices, reduce discretionary expenses, fueling fears of a broader economic slowdown. The main financial institutions now put the chances of a recession over the next year from 45% to 60%, certain growth in American GDP as low as 0.6% in 2025.
Trump’s remarks suggest that he is starting to feel this pressure. His concern that “people will not buy” reflects an increasing consciousness of the decline in demand, a contrast that struck with his previous rejection of fears of inflation. The federal reserve, taken in an obligation, warns that the prices could derail its double mandate of stable prices and full employment, with interest rates likely to remain high and to submit to growth.
The impact of prices extends beyond American borders, shaving near a percentage of world GDP and pushing savings like Japan, South Korea and Canada to the recession. China, struck the hardest hit, retaliated with a price of 84% on American goods, suspended exports of critical metals of rare earths and has slowed imports from Hollywood films and Boeing, reporting a deepening world trade conflict.
The Chinese challenge pushes climbing. Rejecting Trump’s prices as a “game of figures” with little economic bite, the Beijing Foreign Ministry promised to move forward with countermeasures. However, Trump, highlighting his “very good relationship” with Chinese chief Xi Jinping, alluded to the negotiations in progress, noting the repeated awareness of XI.
“I think we will be able to conclude an agreement,” he said, suggesting a potential path to de-escalation. He also linked the impasse tariff to the fate of Tiktok, of which the parent company Bytedance faces a deadline for summer to yield its American operations or get out of the market.
“We have an agreement for Tiktok, but it will be subject to China,” said Trump, indicating that commercial concessions could be part of a broader agreement.
The inner toll of the prices is just as austere. Car manufacturers like Stellantis announce dismissals and plant closings in Canada and Mexico, while General Motors is struggling with the increase in production costs. The retailers, suspicious of consumers’ backlands, are about to further increase prices in summer, a high -end smartphone potentially costing $ 2,300 if the costs are fully reflected. Low -income households face disproportionate losses, with annual charges estimated at $ 1,700, exacerbating economic inequalities. Public feeling is embittered, polls showing a general concern about price increases and skepticism about the promised advantages of prices.
On a global scale, the allies are bristling. Japan and South Korea, slapped with prices of 24% and 25%, prepare reprisal measures, while the European Union warns against the costs of “burden” for companies. Canada and Mexico, targeted with automotive prices, face economic pressure, Canadian consumers boycotting travel. Trump’s insistence on the “balanced bilateral trade” has encountered resistance, even Vietnam’s offer to eliminate prices on postponed American goods. The forecast for global growth of the end of 2025, at only 1.4%, is the lowest since the 2008 financial crisis, excluding the pandemic era.
The change of Trump occurs in the midst of these political and economic opposite winds. Its decision of April 9 to suspend the reciprocal prices for 90 days briefly rallied the markets, but the renewed climbing fears maintained the investors at the forefront. The warning of the leader of the Senate minority, Chuck Schumer, of a “market crash”, the vaporizing retirement accounts have amplified calls for restraint. The index of uncertainty of economic policy reflects the prudence of companies, companies delaying investments in the midst of the volatility of prices. The projection of the Federal Reserve of a GDP growth rate of -2.4% for the first quarter highlights the urgency to fight against the crisis.
In this context, analysts believe that Trump’s desire to consider lower prices could stabilize markets and facilitate consumer expenses. However, it is accompanied by challenges, largely based on the defensive requirements of the other nations involved. For example, negotiations with China, potentially linked to Tiktok transfers and technology, offer hope, but Beijing’s hard position complicates prospects.
If prices remain at current levels, economists predict that unemployment could reach 4.5% and inflation could reach 4.7%, pushing the United States to stagflation – a toxic mixture of high prices and low growth. The federal reserve, faced with a “rock and a hard place”, may have trouble avoiding a slowdown without exacerbating inflation.
