World stocks mixed under pressure of more USA tariffs

Gladys Abbott
July 21, 2018

President Donald Trump on Friday threatened to place tariffs on all goods imported by the USA from China in a major escalation of the burgeoning trade war between the two nations.

In response to a question about whether he would ever impose tariffs on $500 billion worth of Chinese goods, he said he's "ready to go to 500".

"Now I'm just saying the same thing that I would have said as a private citizen", said Mr. Trump.

This was not the first time Trump departed from a long-standing practice of US presidents steering clear of commenting on Fed policy and the value of the dollar, a custom he dismissed on Thursday.

"The US should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals", Trump said on Twitter.

With President Donald Trump intensifying his rift with US trading partners, economists are growing more doubtful that any deal that might benefit American workers and companies is in sight.

Even though he's frustrated, Trump said he's "letting them do what they feel is best".

The dollar index turned negative following the release of Trump's remarks, which were excerpted from a longer interview due to air Friday morning.

"I'm ready to go to 500".

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Ex-Dallas Fed President Richard Fisher told CNBC that Trump was off course in his criticism of the Fed, which is headed by Trump appointee Jerome Powell.

On July 20, Trump said that he thought the Federal Reserve raising interest rates undermined the economy.

Trump's comments caused the Dow Jones Industrial Average to register a slight dip before the opening stock market bell in NY, though it then shook off the president's threat and rose again on strong U.S. corporate earnings growth.

The Fed has raised interest rates five times since Trump took office in January 2017, extending the campaign it began in 2015.

"I am not happy about it", Trump said.

China's central bank is allowing its tightly controlled currency to drift lower against the dollar, a move that could help Chinese exporters cope with USA tariff hikes.

Meanwhile in Brussels, EU Trade Commissioner Cecilia Malmstrom said the EU would "think out of the box" in a bid to find a solution, but she warned officials were preparing to respond with what she called "rebalancing measures" should the United States follow through with the auto tariffs. The Fed is charged with keeping prices stable, often by raising interest rates to prevent the economy from overheating. In a reference to interest-rate increases by the Federal Reserve, Trump added, "tightening now hurts all that we have done".

Goods already affected by Trump's tariffs against China include batteries, trains, and ball bearings, but they could extend to more consumer goods if further tariffs are imposed. Trump told CNBC he's anxious the Fed's policies will cancel out his efforts to boost the economy.

"I don't want them to be scared".

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