Trump says he's willing to hit all Chinese imports with tariffs

Daniel Fowler
July 21, 2018

In a pair of tweets, Trump said China, the European Union and others had been "manipulating their currencies and interest rates lower" while the United States dollar strengthened, eroding "our big competitive edge".

Artjom Hatsaturjants, research analyst at Accendo Markets, said "market sentiment soured on President Trump criticizing the Fed for hiking rates and threatening to go "whole hog" on imposing tariffs on all $500 billion of Chinese imports to the USA, further inflaming global trade tensions and putting at risk central bank independence".

"The United States should not be penalized because we are doing so well", Trump said in a tweet Friday morning.

Feroli also noted that the easiest way for Trump to bend the Fed to his political will would be to fill the Federal Reserve Board of Governors with members that agreed with a low interest rate policy or were personally connected to the president. So the Fed's rate hikes have lit a fire under the USA dollar, something which tends to widen the country's trade deficit as foreign countries with weaker currencies become much cheaper to import from.

The United States' aggressive stance in its trade war with China should be viewed in a purely economic context and not as part of a wider, politically driven approach, an American official familiar with the situation said on Friday.

The president also claimed that interest rate hikes would hinder his efforts to force China into fairer trade terms with the U.S. The Fed has been raising rates since 2015 and has already hiked them five times since Trump took office in January 2017. Low interest rates reduce the costs of borrowing money and fuel economic expansion, but risk spurring rampant inflation and financial market bubbles.

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 a year ago from China. He also called Jerome Powell, whom Trump nominated to lead the Fed, a "very good man".

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"I'm not thrilled, because we go up and every time you go up they want to raise rates again", Trump told CNBC.

Interest rate hikes can suppress investment and the unemployment rate, two metrics Trump and Republicans touted frequently throughout his presidency.

During the 2016 campaign, Trump said she should be "ashamed of herself" for creating a "false stock market" with low rates.

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

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

"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. Powell has said the economy is strong enough for the Fed to keep raising rates gradually.

In Washington, automakers and suppliers at a public hearing on Thursday pleaded with Trump's administration to reject tariffs on vehicle imports, which they say could cripple domestic manufacturing and cause job losses.

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