Trump claims Fed rate hikes hinder U.S. economy

Cornelia Mascio
Luglio 23, 2018

The manipulation of the yuan, considered by many to be undervalued, is a direct response to Trump's actions on global trade and protectionism, sparking fears that China could "turn a trade war into a currency war", says Quartz. Tightening now hurts all that we have done.

The Fed has hiked interest rates five times since Mr. Trump took office, with the last two increases coming under Chairman Jerome Powell, whom the president picked to replace Janet Yellen. I don't necessarily agree with it because he's raising interest rates, I'm not saying I agree with it, and I don't necessarily agree with it, I must tell you I don't. Earlier this month, the United States imposed tariffs on $34 billion of Chinese imports.

"Trump's comments that he was "ready to go to 500" of tariffs in imports from China; that he was "not thrilled" about the prospects of Fed hikes and that "China, the European Union and others have been manipulating their currencies" saw a volatile close to the week".

"So somebody would say, 'Oh, maybe you shouldn't say that as president.' I couldn't care less what they say, because my views haven't changed". That's because China only imports $129.9 billion in US goods each year.

"China will suffer some damage from this trade war with the U.S. and we have to take some countermeasures", the editorial stated.

When asked about the stock market possibly falling if the United States imposes such a large amount of duties, Trump said: "If it does, it does".

"Trade tensions remain a risk, but with an extended period until implementation (of the tariffs) and the next round of escalation, APAC equities are unlikely to respond much to Trump repeating threats already known", JPMorgan added.

The growing share of worldwide trade under threat - including the tariffs on autos and auto parts now under consideration - could harm the global economy by disrupting manufacturing supply chains, raising prices and causing firms to hold off on new investments.

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.

"The dollar going down typically tends to lift equities and I think that is partly why we have seen a little bit of a turnaround today", Frederick said. "I'd throw a tax on every Mercedes-Benz rolling into this country and on all Japanese products, and we'd have wonderful allies again".

Mr Trump said increased rates had resulted in a stronger dollar which put the U.S. at a disadvantage compared with places where central banks are holding interest rates steady.

China imports far less from the USA, buying about US$130 billion in American goods a year ago, so it doesn't have as much to leverage with tariffs, but it could use other measures to hit trade such as tightening regulatory oversight.

The comments, plus Trump's criticism of Federal Reserve interest rate hikes, had sent the dollar tumbling against a basket of currencies.

However, analysts said China may be willing to allow further depreciation as the trade war rumbles on.

In Singapore, for example, exports rose 1.1 percent in the year to June compared with expectations of a 7.6 percent increase, while electronic exports slipped 7.9 percent.

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