Commerce Secretary Howard Lutnick said a possible recession from Trump's tariff policies would be "worth it" because of what comes next.

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Simone Del Rosario Business Correspondent

Politics

Commerce secretary: Tariff policies ‘worth it’ even if recession comes

2 hrs ago

Simone Del Rosario Business Correspondent

By Simone Del Rosario (Business Correspondent), Brent Jabbour (Senior Producer), Emma Stoltzfus (Video Editor)

U.S. Commerce Secretary Howard Lutnick said tariff policies are “worth it” even if they lead to a recession, two days after saying there would be no recession in America.
American banks say there is an increased risk of recession over the next 12 months.
President Donald Trump previously refused to rule out a recession as his tariff policies take effect, calling it a “period of transition” for the economy.

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U.S. Commerce Secretary Howard Lutnick said if the Trump administration’s policies lead to a short-term recession, it’s “worth it.” Lutnick’s latest comments come as the biggest banks in the nation say there is an increased chance of an economic downturn.

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“These policies are the most important thing America has ever had, so it is worth it,” Lutnick said during an appearance on “CBS Evening News” on Tuesday, March 11, when asked whether President Donald Trump’s tariff policy causing a recession would be worth it.

“It is worth it,” Lutnick stated. “The only reason there could possibly be a recession is because of the Biden nonsense that we had to live with.”

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What’s the latest on Trump’s tariff policies?

President Donald Trump instituted 25% tariffs on steel and aluminum on Wednesday, March 12. The duty received a response from the European Union, which implemented retaliatory tariffs on items including motorcycles, whiskey and jeans.

The administration’s back-and-forth on tariffs has spooked the stock market in recent weeks. All three major indexes have given up gains since Trump was elected in November 2024. Still, the commerce secretary said that markets would adjust to the pace of Trump’s policy.

“Markets are going to learn,” Lutnick said Tuesday. “Let the dealmaker make his deals. Let the best negotiator and the best person who cares about America, let him make the deals.”

Economists say recession chances are rising

As markets fall and economic policy is uncertain, recession talk has picked up. Goldman Sachs recently increased the odds of a recession from 15% to 20%. Meanwhile, economists at JPMorgan say there’s a 40% chance of recession in 2025.

“I do think the likelihood of a recession has risen,” Morgan Stanley’s Chief U.S. Economist Michael Gapen told NPR Tuesday. “Pegging it to a particular probability is hard. Maybe 20%-25%, so maybe twice as high as you might have in any normal given year. So the probability has risen, given the combination of policies, tariffs, spending cuts, immigration controls, which all tend to soften activity in the near term.”

Tariffs impact the cost of goods

Gapen told NPR that tariffs are essentially a tax on American citizens.

“Tariffs are essentially a tax on consumption — you pay more to import that good, so the cost to the consumer ends up rising,” he said.

“So one of the simple tenets of economics is if you make something more expensive, you get less of it,” Gapen added. “So less trade activity tends to mean growth is a little softer. But you impose tariffs, it tends to push inflation higher in the short run. So that’s the balance we’re considering.”

Tariffs cause a ‘period of transition,’ so what’s the end game?

Over the weekend, President Trump didn’t rule out the possibility of a recession and suggested that due to his policies, the economy could experience a period of transition. Gapen also spoke about the transition ahead.

“You would hope the costs you pay in the short run are outweighed by the gains in the long run, but those short-run costs tend to be more obvious,” Gapen said. “The gains over time, we’re never quite sure if they materialize. But that is, I think, the argument they’re making and why we might see some softness in the near term.”

In the latest running estimate by the Federal Reserve Bank of Atlanta’s GDP tracker, the economy is headed for a 2.4% contraction in the first quarter of 2025. That’s a significant swing from the end of January when it was pacing for 2.9% growth.

A recession typically occurs when there are two consecutive quarters of economic decline. However, the final call goes to a panel at the National Bureau of Economic Research.

“Here’s what happens when you say we’re going to have a tariff on April 2,” Lutnick said Tuesday. “Everybody tries to hustle in before the tariff. So there’s lots and lots, and you could see miles of cars coming into the country to try to beat the tariff from Japan, from Korea and from Germany.”

“That creates a distorted GDP,” he continued. “It doesn’t change a darn thing about America. Americans are going to see American cars are going to be cheaper than foreign cars, and the people who make those American cars are going to be American, and these things are great for America.”

Tags: cars, CBS News, Donald Trump, Economy, GDP, Goldman Sachs, Howard Lutnick, JPMorgan, NPR, Recession, Recession, Tariffs, Trade, Used cars

[Commerce Secretary Howard Lutnick]

There’s going to be no recession in America.

[Simone Del Rosario]

It only took two days for Commerce Secretary Howard Lutnick to change his tune. After adamantly insisting there will be no recession, in an interview Tuesday, Lutnick says if a recession comes, it’ll be worth it.

[Howard Lutnick]

Anchor: Will these policies be worth it if they lead to a recession, even a short term recession,
Lutnick: these policies are the most important thing America has ever had, so it is worth it. It is worth it a I don’t think the only reason there could possibly be a recession is because of the Biden nonsense that we had to live with.

[Simone Del Rosario]

President Donald Trump officially implemented a 25% duty on steel and aluminum on Wednesday. The European Union retaliated with tariffs on American items like motorcycles, whiskey and blue jeans.

[Howard Lutnick]

He wants to worry about major things for national security of America, steel and aluminum tariffs. That’s today, right? Autos, coming April 2. Semiconductors, pharmaceuticals, things that America must have. So you can imagine these are the kind of tariffs we’re going to make sure these things come back to America and are built in America. And then on April 2, he does his reciprocal tariffs.

[Simone Del Rosario]

Trump’s back and forth on tariffs since taking office in January has spooked the stock market. Over the past couple of weeks, the three major indexes have all seen significant losses.

But Lutnick says investors need to get with the times.

[Howard Lutnick]

Markets are going to learn. Let the deal maker make his deals. Let the best negotiator and the best person who cares about America, let him make the deals.

[Simone Del Rosario]

Trump’s tariffs are leading to more recession chatter. Goldman Sachs recently increased odds of a recession in the next 12 months from 15% to 20%. Meanwhile, economists at JPMorgan say there’s a 40% chance of recession in 2025. Morgan Stanley also upped its probability.

[Michael Gapen]

I do think the likelihood of a recession has risen. You know, pegging it to a particular probability is hard. Maybe 20%, 25%, so maybe twice as high as you might have in any normal given year. So the probability has risen, given the combination of policies, tariffs, spending cuts, immigration controls, which all tend to soften activity in the near term.

[Simone Del Rosario]

So how will all of this affect Americans? Morgan Stanley Chief U.S. Economist Michael Gapen took a stab at explaining it on NPR this week.

[Michael Gapen]

Tariffs are essentially a tax on consumption – you pay more to import that good, so the cost to the consumer ends up rising.

So one of the simple tenets of economics is if you make something more expensive, you get less of it.
So less trade activity tends to mean growth is a little softer. But you impose tariffs, it tends to push inflation higher in the short run. So that’s the balance we’re considering.

[Simone Del Rosario]

Gapen and the Trump administration may disagree that tariffs are tantamount to a tax. But both agree the U.S. is embarking on a period of transition.

Question: Are you expecting a recession this year?
President Donald Trump: I hate to predict things like that. There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing. And there are always periods of, it takes a little time. It takes a little time.

[Michael Gapen]

In economics, we would say transition to a new equilibrium, it tends to mean there’s a disruptive period of transition. And so you would hope the costs you pay in the short run are outweighed by the gains in the long run, but those short-run costs tend to be more obvious. The gains over time, we’re never quite sure if they materialize. but that is, I think, the argument they’re making and why we might see some softness in the near term.

[Simone Del Rosario]

In the latest running estimate by the Atlanta Fed’s GDP tracker, the economy is headed for a 2.4% contraction in the first quarter of 2025. That’s a big swing from the end of January when it was pacing for 2.9% growth.

Remember, a recession typically occurs when there are two consecutive quarters of economic decline. But the final call goes to a panel at the National Bureau of Economic Research.

For more on how they make the call, search “NBER RECESSION” for this story at SAN.com and the SAN app. For SAN, I’m Simone Del Rosario.