Trump's threat of tariffs on all $505bn of Chinese imports knocks markets

Trump's threat of tariffs on all $505bn of Chinese imports knocks markets

However, many analysts doubt Trump's comments will have much impact on Federal Reserve policy or the markets. Debt coming due & we are raising rates - Really?' Trump wrote. Trump's comments point to a willingness to push the envelope as far as the US needs to get Chinese tariff concessions, along with a pledge to stop stealing American technology.

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.

But falling prices and lower sales would hurt US soybean farmers, it warns, pointing out that USA prices have fallen by 18 percent from May to early July, to their lowest this year.

'Of course the President respects the independence of the Fed.

Major indices in Germany and France, which had been trading largely flat, dropped by 0.3 per cent and... "At the very least, it injects uncertainty into the markets".

Trump said the "being taken advantage of" on a number of fronts, including trade and monetary policy.

Trump's threat comes as the trade war with China threatens to go into overdrive.

Trump's giving the Air Force One a patriotic makeover
Kennedy's administration. "Red, white and blue, Air Force One is going to be incredible, it's going to be the top of the line, the top in the world", he said.

His remarks anxious investors already grappling with the impact of a strengthening dollar on corporate results, and key stock indexes on Wall Street dropped at the open on Friday. The greenback quickly lost ground and Treasury yields retreated. "In fact, an argument can be made that the President's comments may skew the Committee in a hawkish direction: if a decision is a close call then the appearance of kowtowing to the President may bias them toward raising rates".

The Trump administration's own fiscal policy may be contributing to the strong dollar and the nation's growing trade deficit, said Sobel. In return, China levied taxes on the same value of USA products.

"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 [sic] gets stronger and stronger with each passing day - taking away our big competitive edge". Yet he said he has not pushed the tariffs out of any ill will towards China. His comments on the yuan indicate the president is willing to drag currencies into the conflict, which shows little sign of abating.

While the White House attempted to assuage concerns by reiterating the president's support for the Fed's independence, the comments still raised the spectre of a huge policy mistake from the 1970s. "In light of the European Union and others saying they are ready to respond to tariffs on cars, the stakes are rising fast".

Prior to that, President Richard Nixon put pressure on more than one Fed chief to bend to his will on setting interest rates, which is why at least one watcher says the current squabble between the White House and the Fed is nothing new.

The Fed has hiked interest rates twice this year and could jack the rate up twice more before year's end. His remarks Friday suggest his trade hawkishness may influence other realms of American policy, including its stance on the price of money.

Beijing is targeting, in particular, sectors like American agriculture that could harm Trump politically at home.

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