Trump Is Ready To Go All In On Trade War With China

Trump Is Ready To Go All In On Trade War With China

By breaking with a 25-year tradition and criticizing Federal Reserve officials for raising interest rates, President Donald Trump has put Fed policymakers in a no-win position that could jeopardize the economic expansion, at least one Fed scholar says.

Trump told CNBC on Thursday that he was "not thrilled" that the U.S. central bank is raising interest rates as the economy improves, Xinhua reported. I don't really - I'm not happy about it.

In a taped interview with the business channel CNBC, Trump said "I'm willing to go to 500", referring roughly to the $505.5 billion in goods imported past year from China.

The tweets came shortly after CNBC broadcast an interview with Mr. Trump in which the president said he was prepared to impose US tariffs on $500 billion worth of imports from China as part of his push to narrow USA trade deficits.

The Fed has raised interest rates five times since 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.

Wall Street and European stock markets stalled, despite good corporate earnings, after Trump threatened to impose tariffs on all USA imports from China. Last year, the U.S. imports from China reached $ 505.5 bn, while exports were at only $ 129.9 bn.

The bigger problem, he says, is that perceptions of Fed policy and the economy are almost as significant as the policy decisions themselves.

The US dollar lost ground against rival currencies following the comments.

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The comments follow his criticism Thursday in an interview in which he called the rate hikes a threat to the US economy.

Trump, however, has made reducing US trade deficits a priority and the combination of rising interest rates and a strengthening dollar pose risks for export growth.

The Fed's Board of Governors declined to comment. Powell last week told American Public Media's "Marketplace" program that the Fed has "a long tradition here of conducting policy in a particular way, and that way is independent of all political concerns". "I don't necessarily agree with it because he's raising interest rates".

Hatch took aim at tariffs imposed by Trump not only on China but also on USA allies and partners in Europe, Canada and Mexico.

Trump also said the "being taken advantage of" on trade and monetary policy. "I want them to do well", the United States president said of China.

But Trump was back at it this morning in a tweet that again slammed the Fed's monetary policy: "Tightening now hurts all that we have done". Greenspan did lower rates 13 times over 1991-92, but slowed the pace of cuts in the latter year, much to the White House's annoyance.

Put another way: The best way for the Fed to assert its independence is to do exactly the opposite of what Trump suggested.

Presidents have historically avoided criticizing the Fed, which is created to be independent from political interference. "The United States should not be penalized because we are doing so well".

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