Trump Threatens to Dramatically Expand Trade War With China

Blanche Robertson
July 21, 2018

President Trump's criticism of the Federal Reserve on Thursday came as a shock to traders, driving down U.S. interest rates, the U.S. Dollar and stocks.

"As usual, not a level playing field".

After criticising the Federal Reserve for raising the cost of borrowing, he went on to say: "The United States should not be penalized because we are doing so well".

The US, which is now doing well, should preserve its right to recover what was lost through such practices as illegal currency manipulation and trade deals that were not profitable for the US, the president tweeted.

Its decline provides "a significant offset to the loss in export competitiveness for Chinese exporters due to higher U.S. tariffs", Rajiv Biswas, chief Asia economist with IHS Markit, told AFP.

Fears are growing over a fierce global trade war, after Trump's imposition of hefty import taxes on steel and aluminum from the EU, Canada and Mexico, in addition to levies already on goods from China worth tens of billions of dollars that have sparked retaliatory tariffs.

The comments come as the USA government is also considering taxing auto imports.

"I'm not doing this for politics, I'm doing this to do the right thing for our country".

In an interview with CNBC yesterday, the U.S. leader also hit out at the Federal Reserve for interest rate hikes, complaining that the United States needs a weak dollar.

"I'm not thrilled", he said in an interview on CNBC television. Its rate hikes are meant to prevent the economy from overheating and igniting high inflation.

"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.

Later, the White House said in a statement that Trump respects the Fed's independence and was not interfering with its policy decisions.

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No one was killed. "He is said to be in his mid-30s and is in police custody", the newspaper reported. Unconfirmed local media reports said the attacker was detained by police.

"This is more noise than direction as he alone will likely yield little to no influence over Fed decision-making", said Mazen Issa, senior FX strategist, at TD Securities in NY.

But the president also acknowledged he was aware of the traditions that president's typically allow the Fed to operate independently to ensure the smooth functioning of the world's largest economy. "We have been ripped off by China for a long time". "I'm ready to go to 500", he said.

Trump is breaking with decades of tradition that presidents avoid commenting directly on the dollar or the path of US monetary policy.

The comments raised eyebrows in the United States, where presidents are expected to avoid criticism of the central bank in deference to its independence.

The Reserve has hiked interest rates five times since Mr Trump took office at the start of 2017.

'I'm not happy about it.

"I don't want (China) to be scared".

In a Friday tweet the president laments rising USA interest rates, a day after he cast aside concerns about the Federal Reserve's independence to say he was unhappy with the central bank's recent actions. He also called Jerome Powell, whom Trump nominated to lead the Fed, a "very good man".

Looser policy tends to pressure a country's currency.

ASIA'S DAY: Earlier, before Trump's comments were aired, most Asian markets finished higher.

"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", he said.

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