Recession fear grips US but Trump says ‘we’re doing very well on tariff policy’

Despite growing fears of a recession, Donald Trump insisted that his global trade war was “doing really well”, even as Beijing retaliated by sharply increasing duties on US exports to China.

While the US president claimed that his hardline tariff policy was “moving along quickly”, a closely watched economic survey revealed that American consumer expectations for price growth had reached a four-decade high.

The White House has maintained that the US economy is on the brink of a “golden age”, even as dozens of countries — now subject to a 10% US tariff after Trump postponed plans for steeper rates until July — rush to strike trade deals.

“The phones have been ringing off the hook to make deals,” White House press secretary Karoline Leavitt told reporters on Friday.

That same day, Beijing raised tariffs on US imports to 125%, the latest escalation in its deepening trade row with Washington, accusing Trump of “unilateral bullying and coercion”.

“Even if the US continues to impose even higher tariffs, it would no longer have any economic significance, and would go down as a joke in the history of world economics,” China’s finance ministry declared.

Some investors weren’t laughing. US government bonds — long considered among the world’s safest assets — continued to fall, with the market poised for its largest weekly loss since 2019. The dollar also weakened against a basket of currencies, including the euro and the pound.

After days of volatile trading, major stock indices stabilised on Friday. In London, the FTSE 100 rose by 0.6%. In New York, the S&P 500 climbed 1.8%, while the Dow Jones Industrial Average gained 1.6%.

The S&P 500 ended an exceptionally turbulent week up 5.7%, marking its largest weekly gain since November 2023.

“We are doing really well with our tariff policy,” Trump posted on his Truth Social platform. “Very exciting for America and the world!!! It’s moving forward swiftly.”

However, some key Wall Street executives expressed scepticism over Trump’s assertions.

According to the University of Michigan’s regular survey, US consumer sentiment fell by 11% to 50.8 this month, prior to Trump’s tariff announcement earlier in the week.

Inflation expectations, meanwhile, surged. Survey respondents forecast a 6.7% rise in prices over the coming year — the highest level of year-ahead inflation expectations since 1981.

“There is great optimism in this economy,” Leavitt said during a White House briefing when questioned about the findings. “Trust in President Trump. He knows what he’s doing. This is a proven economic formula.”

Trump reclaimed the presidency in November by vowing to cut costs swiftly, which he recently claimed is already happening. Official data showed that annual inflation in the US rose by 2.4% last month.

Senior Democrats have urged the country’s top financial watchdog to investigate possible insider trading and market manipulation after Trump posted on social media that it was “A GREAT TIME TO BUY!!!” just hours before announcing a reduction in tariffs on Wednesday.

A series of erratic policy decisions created a rollercoaster week for markets. The S&P 500 plummeted 12% over four sessions before rebounding nearly 10% in a single day, after the administration reversed plans to raise tariffs on most countries — except China, which now faces a 145% duty on its exports to the US.