Trump escalates his war with the Fed

Gladys Abbott
July 20, 2018

Global markets are falling late on Friday morning after US President Donald Trump threatened to levy new tariffs on more than $500 billion of goods from China.

The FTSE 100, which had edged up 11 points in early trading, fell almost 18 points to 7,666.00 after Donald Trump told CNBC's Joe Kernen in a Squawk Box interview today that he was prepared to tax all of the $505.5 billion of imports from China.

Doing so would mean that American households and companies would have to pay sharply higher prices for all Chinese products, as long as the tariffs remained in effect. "What we accuse trade partners of doing, the president is doing".

The reaction to Trump's remarks in the financial markets was muted. USA stock prices also briefly pared losses after news of his remarks.

The latest attack by Trump comes amid escalating trade disputes between the USA and its trading partners.

Trump said shortly after his first meeting with Chinese President Xi Jinping in 2017 that the country had stopped manipulating its currency because of his election.

Earlier, Trump said he was willing to tax every product imported from China, sending USA markets sliding before the opening bell on Friday.

Trump has so far focused on using tariffs to force China to change its trade practices. European Union officials are readying a list of retaliatory tariffs that would be applied in response. The yuan tumbled this week to its lowest value in a year, raising questions about whether Beijing was letting the currency weaken to insulate itself from American trade measures.

Powell has downplayed concerns about Trump's politicizing the Fed.

More news: Cyclist tries to take on rising drawbridge

"What I saw in that brief excerpt is a president who is going to drive his trade and tariff policy forward regardless of outside objections", McKenna added. During the interview, Trump himself predicted the response: "Now I'm just saying the same thing that I would have said as a private citizen", he said. "We have been ripped off by China for a long time", he said.

Mr. Trump's economic policies, including the biggest tax cut in USA history, have fueled a strong economic expansion and record low unemployment.

This was not the first time Trump departed from a long-standing practice by U.S. presidents of respecting the Federal Reserve's independence by refraining from commenting on interest rates or the value of the United States dollar, a custom he dismissed.

After sliding recently to its lowest levels in a year as the Sino-US trade conflict heated up, the yuan strengthened to around 6.77 to the dollar around 1600 GMT on Friday in choppy trading.

Even while threatening China, Trump tried to reassure the Chinese government that he was not looking to "scare" the country. Earlier this year, he used national security as a justification for taxing imported steel and aluminum.

President Donald Trump has said he is "not happy" about the fact that the US Federal Reserve is raising interest rates.

Those comments, plus Trump's criticism of Federal Reserve interest rate hikes, caused the dollar to fall back against other currencies, however, including the pound which rebounded from 10-month lows versus the greenback.

"Tightening now hurts all that we have done".

As president, Trump past year said Yellen had "done a good job" and said he liked that she's "historically been a low-interest-rate person".

Other reports by LeisureTravelAid

Discuss This Article

FOLLOW OUR NEWSPAPER