President Donald Trump boards Air Force One at Morristown municipal airport after a weekend in Bedminster, New Jersey, August 4, 2019.
Yuri Gripas | Reuters
President Donald Trump is a one-man army in the full blown trade war with China, The Washington Post reported Tuesday.
Trump is trusting his instincts and ignoring the advice of his aides regarding issues surrounding the trade conflict with the world’s second largest economy, the report said, citing five people briefed on the action.
Trade tensions between the U.S. and China started last year but events in the past week have solidified investors’ and White House aides’ worst fears about the conflict being unresolved and staying that way until Trump is satisfied with a deal.
Markets had their worst day of the year on Monday after China let its currency weaken, crossing the 7 yuan-per-dollar threshold, and reneged on a promise to resume imports of U.S. agricultural products. China’s currency move came in retaliation to Trump’s surprise tweet last week announcing 10% tariffs on the remaining $300 billion in Chinese imports that had eluded duties. A drop in a currency’s value makes that country’s products cheaper on the international market.
Trump accused China of being a “currency manipulator” in a series on tweets on Monday and took aim at the Federal Reserve.
“China dropped the price of their currency to an almost a historic low. It’s called ‘currency manipulation.’ Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!,” he said.
The tweet came hours before the formal decision of the Treasury Department to designate China a currency manipulator, a move that has not been seen since the Clinton administration. Although a symbolic designation, it forced the hand of China’s central bank to get the yuan trading at a higher level against the dollar on Tuesday.
National Economic Council director Larry Kudlow declined to comment in a CNBC interview Tuesday that he and other advisors disagree with Trump’s trade war actions. However, last week Politico reported that Trump’s advisors are pushing him to focus on keeping the economy strong even if it means letting up on China in the trade war and loosening Trump’s intense criticism of the Federal Reserve Chairman Jerome Powell.
Last week, concerns about global economic uncertainty helped spur the Federal Reserve to cut interest rates for the first time since the 2008 financial crisis. After a 25 basis point reduction in the overnight lending rate, Powell said “implications of global developments for the economic outlook as well as muted inflation pressures” contributed to the Fed’s decision.
Powell received intense criticism from Trump, as the president feels the central bank should enter a deep cutting cycle.
— Read the full Washington Post story here.