Trump threatens to slap tariffs on all $505bn of Chinese imports

Erika Holt
July 21, 2018

"We have been ripped off by China for a long time".

During a series of morning tweets Friday, Trump sought to reassure farmers anxious about his trade policies, saying he was aiming to fix a long-term downward trend in prices.

Beijing has vowed to hit back dollar-for-dollar and accused the United States of starting the "largest trade war in economic history". Tightening now hurts all that we have done.

The threat to place tariffs on all Chinese goods sent to the USA would effectively end the tit-for-tat trade battle between the two nations, as Chinese imports from the United States are a comparatively small $129.9 billion. Currently, Trump has slapped tariffs on $34 billion in Chinese goods, which China has retaliated on. In return, China levied taxes on the same value of USA products. That episode ultimately triggered runaway inflation that took a decade to tame and required raising the Fed's policy rate above 15 per cent - more than eight times the rate's current average.

Because it is longstanding policy for the Fed to be independent, presidents in the past have been hesitant to comment on its decisions. Chairman Jerome Powell has played down concerns about Trump's politicizing the Fed. I want them to do well.

"Usually the goods only take 10 days to reach USA customers", Wu Yuepei, a manager at Qiwang Textile Product, tells Global Times.

Mr. Trump also took aim at rate increases by the USA central bank, departing from decades of presidents refraining from commenting on the strength of the US dollar or the actions of the Federal Reserve to combat inflation and stimulate economic growth.

Trump's comments are a break with tradition that presidents avoid commenting on the path of domestic monetary policy.

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Doing so slows growth, as it raises the cost of borrowing, but can also prevent the economy from overheating and tipping into recession.

"I don't necessarily agree with it, and I must tell you I don't, I'm not thrilled", Trump said in an interview with CNBC. "I'm really firmly committed to staying in our lane, and, you know, our lane is the economy", he told the Senate Banking Committee on Tuesday.

"I don't want them to be scared".

When asked if the move might cause a stock market drop, he said: "Well, if it does, it does".

Trump's dismissal of economic-policy tenets shifts attention during a week when he's facing growing pressure over his relationship with Russian President Vladimir Putin and his lukewarm support for the finding by USA intelligence agencies that Russia meddled in the 2016 election. "While inflation expectations are now well anchored, history shows us that a pervasive lack of central bank independence can rapidly, and without warning, lead to rising inflation and economic instability".

Trump has taken credit for robust USA economic performance since his election and championed December's sweeping tax cuts.

With the economy growing at a healthy rate, Powell has said the time is right to normalize interest rates, which have been at historic lows as the economy has recovered.

Senior EU officials, including the European Commission's president, Jean-Claude Juncker, are set to fly to Washington, DC, next week with the aim of persuading Trump not to levy punitive tariffs on European automobiles. I couldn't care less what they say, because my views haven't changed.

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