Trump says US economy in transition as trade war escalates

US President Donald Trump has refused to say whether the US economy is facing a recession or price rises in the wake of his administrations flip-flopping on tariff threats against some of its closest trading partners.

Asked if he was expecting a recession this year, Trump said there was a "period of transition" taking place.

Commerce Secretary Howard Lutnick, however, insisted there would be no contraction in the worlds largest economy, while acknowledging that the price of some goods may rise.

It comes after a volatile week for US financial markets as investors grappled with uncertainty from his administrations U-turn on some key parts of its aggressive trade policies.

New tit-for-tat tariffs from China, which target some US farm products, come into effect on Monday.

Speaking to Fox News in an interview broadcast on Sunday but recorded on Thursday, Trump responded to a question about a recession: "I hate to predict things like that. There is a period of transition because what were doing is very big. Were bringing wealth back to America. Thats a big thing."

"It takes a little time, but I think it should be great for us," Trump added.

Last week, the US imposed steep tariffs on imports from Mexico and Canada but then exempted many of those goods just two days later.

Stocks markets have been falling in the US since the Trump administration sparked a trade war with the USs top trading partners.

Investors fear tariffs will lead to higher prices and ultimately dent growth in the worlds largest economy.

Speaking on NBC on Sunday, Lutnick said: "Foreign goods may get a little more expensive. But American goods are going to get cheaper".

But when asked whether the US economy could face a recession Lutnick added: "Absolutely not… Theres going to be no recession in America."