WASHINGTON: President Donald Trump on Wednesday acknowledged that his tariffs could result in fewer and costlier products in the United States, saying American kids might “have two dolls instead of 30 dolls,” but he insisted China will suffer more from his trade war.
The US president has tried to reassure a nervous country that his tariffs will not provoke a recession, after a new government report showed that the US economy shrank during the first three months of the year.
Trump was quick to blame his Democratic predecessor, Joe Biden, for any setbacks while telling his Cabinet that his tariffs meant China was “having tremendous difficulty because their factories are not doing business,” adding that the US didn’t really need imports from the world’s dominant manufacturer.
“You know, somebody said, ‘Oh, the shelves are going to be open,’” Trump continued, offering a hypothetical. “Well, maybe the children will have two dolls instead of 30 dolls. So maybe the two dolls will cost a couple bucks more than they would normally.”
His remarks followed a defensive morning after the Commerce Department reported that the US economy shrank at an annual rate of 0.3 percent during the first quarter. Behind the decline was a surge in imports as companies tried to front-run the sweeping tariffs on autos, steel, aluminum and almost every country. And even positive signs of increased domestic consumption indicated that purchases might be occurring before the import taxes lead to price increases.
Trump pointed his finger at Biden as the stock market fell Wednesday morning in response to the gross domestic product report.
“This is Biden’s Stock Market, not Trump’s,” the Republican president, who took office in January, posted on his social media site. “Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden ‘Overhang.’ This will take a while, has NOTHING TO DO WITH TARIFFS.”
But the GDP report gives Democrats ammunition to claim that Trump’s policies could shove the economy into a recession. Democrats’ statements after the GDP report noted how quickly the economy, which still has a healthy 4.2 percent unemployment rate, appears to lose momentum within weeks of Trump returning.
“Trump has been in office for only 100 days, and costs, chaos and corruption are already on the rise,” said Sen. Jeff Merkley, D-Oregon “The economy is slowing, prices are going up, and middle-class families are feeling the pinch.”
The report landed as Trump is trying to put the focus on new corporate investments in the US as he spends the week celebrating his 100th day in office. He planned remarks later in the day on the subject.
Trump’s economic message contains some clashing arguments and dismisses data that raises red flags.
He wants credit for an aggressive first 100 days back in the White House that included mass layoffs of federal workers and the start of a trade war with 145 percent in new tariffs against China. He also wants to blame the negative response of the financial markets on Biden, who left office months ago. He’s also saying his tariffs are negotiating tools to generate trade deals but at the same time banking on hundreds of billions of dollars in tariff revenues to help cover his planned income tax cuts.
Trump highlighted the positive aspects of the GDP report at the Cabinet meeting. But that session revealed how his administration is also trying to take credit for policies that involve the Biden administration.
Commerce Secretary Howard Lutnick talked about his recent trip to Arizona to see the Taiwan Semiconductor Manufacturing Co.’s computer chip factories. The company notes on its website that it announced plans in May 2020, during Trump’s first term when the coronavirus pandemic disrupted the global economy, to build its first plant in Arizona. The company announced a second factory in December 2022, when Biden was in office. After getting up to $6.6 billion in commitments in 2024 from the bipartisan CHIPS and Science Act, TSMC announced plans for a third plant.
Trump dismissed the importance of the government support that Biden made possible for computer chip factories to open domestically.
“They’re building because of the tariffs,” Trump said.
Yet Democrats are quickly to say that Trump inherited an economy on a steady course of low unemployment and declining inflation that his tariff plans have almost immediately disrupted.
“In just 100 days, President Trump has taken the US economy from strong, stable growth to negative GDP,” said Heather Boushey, a former member of Biden’s White House Council of Economic Advisers. “This astonishing turn of fortune is directly due to the incoherence of his economic policy and his mismanagement of federal policy more generally.”
But White House trade adviser Peter Navarro told reporters that the GDP drop was a “one-shot deal” because of the increased imports, which mathematically subtract from the measure of economic activity. Navarro said that the individual and business income tax cuts planned by Trump would help growth in the months ahead.
“All we’re seeing is good, strong news,” Navarro said. “So the idea that there’s a recession coming should be heavily discounted.”