Published: Fri, July 20, 2018
Markets | By Otis Pena

Trump accuses China, EU of currency manipulation

Trump accuses China, EU of currency manipulation

China promptly levied taxes on the same value of USA products.

In an interview with CNBC broadcast Friday, President Trump said he's ready to escalate the trade war with China by slapping tariffs on every single thing the country exports to the U.S.

Trump said that raising American interest rates makes investment in China comparatively attractive, because China manipulates its currency by artificially devaluing it.

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Trump said shortly after his first meeting with Chinese President Xi Jinping in 2017 that the country had stopped manipulating its currency because of his election.

Trump's rebuke broke with more than two decades of White House tradition of avoiding comments on monetary policy out of respect for the independence of the U.S. central bank. "We do our work in a strictly nonpolitical way, based on detailed analysis, which we put on the record transparently".

"What I saw in that brief excerpt is a President who is going to drive his trade and tariff policy forward regardless of outside objections", Mr McKenna added. "The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals".

The Fed has hiked interest rates twice this year and could jack the rate up twice more before year's end.

The central bank's job is to keep prices stable, including raising interest rates to prevent the economy from overheating and inflation from rising. Chairman Jerome Powell has played down concerns about Trump's politicizing the Fed.

President Donald Trump on Friday attacked China and the European Union for keeping their currencies artificially low to gain a trade advantage, while again blasting the Federal Reserve for raising interest rates.

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The president campaigned on closer ties with Russian Federation, a goal that had been thwarted during his first year in office. On Thursday, the US President asked his national security advisor John Bolton to make the invitation to President Putin.

State-owned China Global Television Network on Friday posted a video, first spotted by Reuters, seemingly created to undermine support for Trump's trade policies.

The US dollar index slipped after Trump's comments were published.

In a bit of hyperbole, former Fed Gov. Frederic Mishkin, on CNBC, brought up the example of Turkey President Recep Tayyip Erdogan's recent move to take over interest-rate policy, including naming his son-in-law to oversee economic policy.

A top Federal Reserve official, meanwhile, warned the trade war could hurt the US economy. "I couldn't care less what they say, because my views haven't changed".

Presidents have long declined to comment on the Fed's actions, out of respect for the independence of the institution, and to avoid any hint of political influence over the nation's monetary supply.

In February, Jerome Powell, Trump's hand-picked choice, became Fed chairperson.

Earlier this month, the United States imposed tariffs on $34 billion of Chinese imports and China promptly levied taxes on the same value of USA products.

"We don't think the dollar rally is at a risk of ending as the economic momentum is still quite strong, though Trump's comments have given an impetus for profit taking", said Manuel Oliveri, a currency strategist at Credit Agricole in London. "We've been ripped off by China for a long time".

It wasn't the first time in history the Fed has faced pressure from a US president.

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