Dr Hassett, who as chairman of the White House Council of Economic Advisors was a key architect of Mr Trump's 2017 tax cuts, believes the US Fed will lower its benchmark rate by 100 basis points when it meets on March 17-18.

Controversially he also cautioned against governments using fiscal policies such as cash handouts, saying they would come too late and wouldn't work.

The US on Saturday (Sunday AEDT) announced fresh travel bans and revealed its first fatality from the COVID-19 coronavirus. The victim was a man in his late 50s in Washington state.

At a rare Saturday (Sunday AEDT) press conference, Mr Trump revealed restrictions on foreign nationals who recently visited Iran and told travellers to avoid hard-hit areas in Italy and South Korea.

The President also flagged potentially closing the Mexican border despite there being no US cases of infection originating south of the border.

Urging calm

As concern about the outbreak escalates, President Trump has tried to re-establish command of the crisis after being widely slammed for downplaying its severity and calling the virus a "new hoax" for Democrats to exploit.

Urging calm even though additional cases in the US "are likely", Mr Trump insisted that "healthy individuals should be able to fully recover".


"Our country is prepared for any circumstance," he said from the White House briefing room, standing alongside top health officials.

"We respectfully ask the media and politicians and everybody else involved not to do anything to incite a panic, because there's no reason to panic at all."

Supply chain disruption

Dr Hassett, who remains close to the White House and is keynote speaker at next week's Australian Financial Review Business Summit, said the coronavirus was so far following the same patern as the 2002-03 SARS outbreak by causing a market panic after the disease started to spread around the world.

Stocks fell by around 20 per cent before rebounding. "We didn't have a long contraction associated with SARS because, in the end, it was contained fairly quickly," he said.

The reason stocks plunged so hard and fast last week – shedding more than 10 per cent in just three sessions – was because "we don't know we can contain [coronavirus] in that manner".

"If we do, we can expect the same outcome. If it lingers into summer, it'll be a recession."

To match the trajectory of the SARS outbreak, coronavirus outbreaks would need to drop off by the middle of March, Dr Hassett said. People "would basically start to go about the business and the disruption is significant but minor".


"If it goes into summer, all bets are off. You're looking at a supply chain disruption unlike any we've ever seen," he said. "The only analogue is 9/11 when we shut our borders for a time.

"For the Australian economy, which is already looking a little weak ... it means recession.

"As you know, Australia is extremely connected to China."

Dr Hassett said the Fed and other central banks were watching the virus fallout "very closely".

"The problem is that in Europe they're already negative, so there's not a lot of room," he said.

"And fiscal policy isn't really able to deal with things like this because it isn't quick enough.

"I could imagine the Fed doing a very big move at the next meeting – like 100 basis points – if this looks like a very serious threat to the global economy."


Dr Hassett said academic literature shows cash handouts "don't really have much effect".

"If you're an Australian exporter then you really need to be aware of which country you export to, and the spread of the disease in that country.

"You could expect activity to slow as people are quarantined. There are places like Taiwan, Singapore, Korea has a terrible problem with it, where a lot of Chinese folks travel.

"So Australian firms that deal with those countries should be prepared for significant slowing of demand."

Mr Trump, who will meet with top drug companies on Monday for talks on developing a vaccine to combat the virus, moved to assuage investors who came close to outright panic last week as share markets suffered their biggest collapse since the 2008 financial crisis.

"The markets are very strong" and they "will all come back", he said, citing the strength of American consumers.

Mr Trump dangled the prospect of fiscal stimulus in the form of middle-income tax cuts, which he said would be revealed in coming months. But he also urged the Fed to act aggressively.

"The Fed has a very important role, especially psychological," Mr Trump said. "Our Fed should be a leader.


"We don't have the lowest interest rates ... you look at Germany, you look at Japan, you look at other countries: many of them have negative rates and we are not put in that position because of our Fed."

Andrew Fouci, a senior US health expert standing beside Mr Trump, said Americans, regardless of where they lived, remained at "low risk" of infection.

The pattern of the virus' spread in other countries indicated that around 15-20 per cent of Americans who contracted coronavirus woulf require medical care, of which a small number would die.

Even though most fatalities would involve older people or those suffering weak immune systems or illnesses such a diabetes and obesity, there would "every once in while" be a healthy, young victim.

"That's gonna happen. That's what happens with influenza," Dr Fouci said.

Vice-President Mike Pence said the US would expand travel limits on "any foreign national" who had visited Iran within the last 14 days.

"We are urging Americans to not travel to the areas in Italy and the areas in South Korea that are most affected by the coronavirus," Mr Pence said.

He also said the average American "does not need to go out and buy a mask".