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A day after considering cutting taxes to promote economic growth, President Donald Trump changed course and said he would abandon the idea because the nation already had “a strong economy.”
Trump’s flip-flop on Wednesday came after recent market volatility and economic uncertainty, and amid a debate about whether the United States was heading for a slowdown that would imperil his re-election chances.
Trump earlier this week acknowledged, for the first time, that his China trade policies may mean economic pain for Americans, though he insisted the tariffs are needed for more important long-term benefits.
But his consideration of cutting payroll taxes appeared short-lived.
“I’m not looking at a tax cut now,” he told reporters at the White House.
“We don’t need it. We have a strong economy.”
Trump also knocked down the idea of indexing to the capital gains tax, which applies when investors sell assets, to inflation.
He said he feared “it will be perceived, if I do it, as somewhat elitist.”
Analysts have warned that a slowdown, if not full-blown recession, could hit before next year’s election.
Trump, however, has largely praised the economy’s performance and his handling of it.
He has often blamed the Federal Reserve (and Chairman Jerome Powell) and the global slowdown for creating dark clouds at home.
“Jay Powell and the Federal Reserve have totally missed the call. I was right and just about everybody admits that,” Trump said Wednesday.
“He raised interest rates too fast, too furious, and we have a normalised rate. And now we have to go the other direction.”
Trump indicated he had no choice but to impose the trade penalties that have been a drag on US manufacturers, financial markets and, by some measures, American consumers.
China, though, said trade with the US has been “mutually beneficial” and appealed to Washington to “get along with us.”
A foreign ministry spokesman, Geng Shuang, expressed hope Washington can “meet China halfway” in settling disagreements.
The US economy appears to be showing vulnerabilities after more than 10 years of growth. Factory output has fallen and consumer confidence has waned as he has ramped up his trade fight with China.
Trump rattled the stock and bond markets this month when he announced plans to put a 10 per cent tax on $300 billion worth of Chinese imports.
The market reaction suggested a recession might be on the horizon and led Trump to delay some of the tariffs that were scheduled to begin in September, though 25 per cent tariffs are already in place for USD 250 million in other Chinese goods.
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