US President Donald Trump said that Washington would increase tariffs on China in case the first step of a broader agreement is not reached.
“If we don’t make a deal, we’re going to substantially raise those tariffs,” he said on Tuesday in a speech to the Economic Club of New York. “They’re going to be raised very substantially. And that’s going to be true for other countries that mistreat us, too.”
China is “dying” to make a trade deal with the US, Trump said, adding that he would only sign it if it is good for US firms and workers.
Still, “we’re close — a significant phase one deal could happen, could happen soon,” he said.
Shanghai stocks yesterday closed at their lowest since Sept. 30, while the yuan was weaker against the US dollar.
Other Asian markets also declined, with Hong Kong’s benchmark declining 1.8 percent as the territory faced heightened tensions.
Trump reiterated complaints about China’s ascendance in the global economy.
“Nobody’s cheated better than China,” he said. “The theft of American jobs and American wealth is over.”
US stocks have rallied to records in recent days partly on optimism that tensions are cooling in an 18-month dispute involving tariffs on about US$500 billion in trade between the world’s two largest economies. The S&P 500 Index was up about 0.3 percent as Trump delivered his remarks.
The economic stakes of a prolonged trade dispute are rising for both countries.
Chinese exports and imports continued to contract last month, though slightly less than forecast by economists. The nation’s trade surplus with the US widened in the month to US$26.4 billion — heading in the opposite direction from the narrowing that Trump has called for to balance the countries’ trade relationship.
Trump also renewed his assault against the US Federal Reserve, saying it was hurting the US by not copying other central banks in deploying negative interest rates.
“We are actively competing with nations who openly cut interest rates, so now many actually getting paid when they pay off their loan, known as negative interest,” Trump said.
“Give me some of that money. I want some of that money. Our Federal Reserve doesn’t let us do it,” Trump said, drawing a laugh from the audience. “It puts us at a competitive disadvantage to other countries.”
The Fed cut interest rates last month for the third time this year to shield the economy from uncertainty over trade and weaker global growth, while signaling that policy is now on hold unless the outlook worsens.
The Fed’s benchmark rate now lies in a target range of 1.5 to 1.75 percent, which is low by historic standards, but higher than Japan and the eurozone, which have shifted to negative rates in an effort to lift moribund economies.
“We’re paying actually high interest. We should be paying by far the lowest interest,” Trump said.
Noting the gains on US stock markets during his presidency, he said they could have risen a further 25 percent “if we had a Fed that worked with us.”
The president has persistently sought to shift blame for slowing US economic growth onto the Fed and away from his trade conflicts with China, which some businesses say has prompted them to delay investment decisions.
US manufacturing has slumped, but consumers remain resilient and employers continue to hire new workers at a solid pace.
Fed Chairman Jerome Powell was scheduled to testify before Congress yesterday and today.
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