Donald Trump took aim at the Federal Reserve chairman, corporate America and China’s president in a barrage of tweets that spooked investors and escalated trade tensions after Beijing announced new tariffs on US products.
The US president’s tirade on Friday came after Jay Powell, the Fed chairman, gave little indication that he was prepared to make a deep cut to interest rates and warned the central bank’s actions could not counteract the effects of the US-China trade war.
Mr Trump’s comments revealed him to be increasingly angry at economic developments as he prepared to fly to France for a summit of G7 leaders, where trade tensions and the global economic slowdown are at the top of the agenda.
....all deliveries of Fentanyl from China (or anywhere else!). Fentanyl kills 100,000 Americans a year. President Xi said this would stop - it didn’t. Our Economy, because of our gains in the last 2 1/2 years, is MUCH larger than that of China. We will keep it that way!
— Donald J. Trump (@realDonaldTrump) August 23, 2019
....better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing..
— Donald J. Trump (@realDonaldTrump) August 23, 2019
In one tweet Mr Trump squarely cast himself as a proponent of economic decoupling between the US and China, demanding that US multinationals ditch their business with Beijing.
“We don’t need China and, frankly, would be far better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP,” he said.
“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA”, he added.
Criticism
US business reacted with dismay to the presidential criticism.
“President Trump may be frustrated with China, but the answer isn’t for US companies to ignore a market with 1.4 billion customers. Escalating tensions is not good for market stability, investor confidence, or American jobs,” Myron Brilliant, executive vice-president for international affairs at the US Chamber of Commerce, said in a tweet.
The US president’s attack on American business followed his most stinging criticism yet of Mr Powell for failing to cut interest rates aggressively in the wake of the Fed chairman’s inconclusive speech in Jackson Hole. “My only question is, who is our bigger enemy, Jay Powel (sic) or Chairman Xi?,” Mr Trump asked.
Bonds surged
US bonds surged after the tweets. The rush to safety came at the expense of US stocks, with the S&P 500 falling more than 2 per cent. In Europe, the Stoxx 600 index turned sharply lower after Mr Trump’s tweets and last fell 0.68 per cent. The Iseq in Dublin finished 0.33 per cent lower.
At the Jackson Hole conference, the annual gathering of the world’s top central bankers, Mr Powell suggested the Fed was prepared to loosen monetary policy further if necessary but dismissed the notion that it could help in the trade war with Beijing, as urged by Mr Trump. Setting trade policy, he said, was “the business of Congress and the administration, not that of the Fed. Our assignment is to use monetary policy to foster our statutory goals.”
New tariffs
Earlier on Friday, China imposed new tariffs on $75 billion (€68 billion) of US products, including pork, nuts and soyabeans, retaliating against Mr Trump’s pledge to place new levies on $300 billion of Chinese imports between September and December this year.
US officials have said they are still expecting face-to-face negotiations with their Chinese counterparts in September, but the fate of those talks is unclear.– Copyright The Financial Times Limited 2019
