x

Abu Dhabi, UAETuesday 21 August 2018

Trump blasts Fed, threatens to put tariffs on all Chinese goods

Trump says he’s “ready to go” with tariffs on $500bn of Chinese goods

US President Donald Trump also says he's prepared to impose U.S. tariffs on all Chinese imports. (AP Photo/Andrew Harnik, File)
US President Donald Trump also says he's prepared to impose U.S. tariffs on all Chinese imports. (AP Photo/Andrew Harnik, File)

President Donald Trump lashed out at China and the European Union for their weak currencies and said a stronger dollar and rising interest rates are undermining America’s “competitive edge,” taking a fresh jab at the Federal Reserve.

Mr Trump also said he’s prepared to impose U.S. tariffs on all Chinese imports.

“China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day -- taking away our big competitive edge," Mr Trump tweeted on Friday. “The United States should not be penalized because we are doing so well.”

In an apparent reference to Fed rate increases, Mr Trump added, “Tightening now hurts all that we have done. Debt coming due & we are raising rates -- Really?”

In a CNBC interview that aired earlier on Friday, Mr Trump said he’s “ready to go” with tariffs on $500 billion of Chinese goods, roughly the value of all U.S. imports from the Asian nation last year. "We are being taken advantage of and I don’t like it,” he said.

_______________

Read more:

UAE-China investments: a bedrock of mutual economic growth

DP World and China sign agreement to build trading cluster in Jebel Ali

UAE-China ties an example to be followed, says Noura Al Kaabi

_______________

Mr Trump’s comments shift attention during a week when he’s facing growing pressure over his relationship with Russian President Vladimir Putin, after the two leaders met on Monday in Helsinki. Mr Trump came under fire for his lukewarm support during a news conference with Mr Putin for the finding by US intelligence agencies that Russia meddled in the 2016 election.

It marks the latest twist in an escalating trade war with countries the president accuses of trading unfairly, raising the prospect that the conflict could also morph into a currency spat. Until now, Mr Trump has mostly focused on using tariffs as leverage to try to convince China and other nations to open up their markets.

Mr Trump is breaking with decades of tradition that presidents avoid commenting directly on the dollar or the path of U.S. monetary policy. The latter is usually seen as the domain of the Fed, while the U.S. Treasury secretary is typically the chief spokesman on the dollar. For years, the US has hewed to the idea that a strong dollar is good for the U.S. economy.

Treasury Secretary Steven Mnuchin heads to Buenos Aires Friday for two days of talks with G-20 counterparts where he will likely face questions about the U.S.’s dollar policy and whether he sees the Fed as independent. Mr Mnuchin has faced criticism from international counterparts about the US talking about currencies before. Within hours of being sworn in as Treasury chief last year, Mr Mnuchin was warned by counterparts from Tokyo to Berlin that the new U.S. administration should refrain from talking about currencies.

The president’s comments likely put a ceiling on the recent US dollar rally so far this year, said Viraj Patel, a foreign-exchange strategist at ING Bank NV.

There’s a risk the dollar “de-couples from interest-rate differentials as investors come to terms with the White House’s mercantilist U.S.-dollar policy,” Mr Patel said.

Mr Trump’s comments that China and the EU are manipulating currencies contradict a Treasury Department semi-annual report released in April that refrained from naming any country a currency manipulator based on specific criteria.

Mr Trump on Thursday criticized the Fed’s series of rate increases, breaking with more than two decades of White House tradition of avoiding comments on monetary policy out of respect for the independence of the US central bank.

The Fed has raised interest rates five times since Mr Trump took office in January 2017, with two of those coming this year under Chairman Jerome Powell, the president’s pick to replace Janet Yellen. In the CNBC interview, Mr Trump called Powell a “very good man.”

The US economy has so far proven resilient to Mr Trump’s threat of taking a trade conflict to the next level. The president has already angered allies by slapping tariffs on steel and aluminum, and he’s considering a widely-criticized move to levy duties on auto-imports.

Mr Trump earlier this month imposed 25 per cent tariffs on $34 bn of Chinese goods, with another $16 bn to follow soon. The administration has also released a list of 10 per cent tariffs on an additional $200 bn of Chinese goods, which could take effect as early as next month. China retaliated on the first wave of tariffs by slapping duties on the same dollar amount of U.S. imports, and Beijing has said it’ll fight against any further U.S. actions.

RELATED ARTICLES
Recommended