Treasury's Mnuchin says no recession on horizon, China will ultimately pay for tariffs
Treasury Secretary Steven Mnuchin said Sunday the Trump administration doesn’t see a recession in the near future and that a large portion of tariffs in the escalating trade war will be paid for by China.
“We don’t see a recession on the horizon,” Mnuchin said during an exclusive interview on “Fox News Sunday.”
“I don’t think the yield curve reflects a recession. I think the yield curve reflects the fact that it anticipates the Fed is going to lower short-term rates.”
Mnuchin, speaking from the G-7 in France, said despite growing fears of an economic slowdown, the American economy was still the “bright spot” of the world and talk of the town among participants at the annual summit.
“People are now talking about doing tax cuts and cutting regulations in Europe, so people are looking at the Trump economic policies and wanting to replicate them because that’s the reason we have all this growth,” he said.
To those with concerns about a looming slowdown or recession, Mnuchin said to look at data quarterly, adding that the only uncertainty in the current climate is trade. He noted the administration expects the U.S.-Mexico-Canada trade agreement (USMCA) that was crafted to replace NAFTA to pass in “the next month or two.” Congress, currently in its August recess, will return to session the week after Labor Day.
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“That’s going to add a significant amount to U.S. growth and growth in Mexico and in Canada,” the Treasury secretary said. “We have the Korea deal done. There’s three or four other major agreements that Amb. Lighthizer is working on. So these trading relationships are going to add significantly to growth.”
Meanwhile, Mnuchin reiterated the administration’s view that U.S. taxpayers are not bearing the brunt of the tariffs on China. Trump announced on Friday that the tariffs on the remaining $300 billion of goods from China – set to go into effect on Sept. 1 at a 10 percent rate – would now be taxed at 15 percent.
“As it relates to prices going up, going forward we have seen China depreciate their currency,” Mnuchin said.
“That’s going to mean that a significant amount of the tariffs are paid for by China. We haven’t seen any inflation yet. We haven’t seen prices go up. We will have some exceptions for the rare circumstances where we have problems and Amb. Lighthizer is running that. So I don’t think there’s any mischaracterization on the tariff issue.”