Trump may slap tariffs on all $505 bn of Chinese imports

Chinese yuan

Chinese yuan

Yields on Treasuries climbed the most since May as Trump reiterated that he's unhappy with the Federal Reserve tightening after the administration has worked so hard to grow the economy.

President Donald Trump declared on March 2 via Twitter: "When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win". He also lamented the strength of the dollar and accused the European Union and China of manipulating their currencies.

MORE TARIFF TALK: In a taped interview with the business channel CNBC, Trump said "I'm willing to go to 500", referring roughly to the $505.5 billion in goods the US imported past year from China. Trump has slapped tariffs on imported steel and aluminum, provoking retaliatory measures by Canada, Mexico and USA allies in the European Union.

European auto shares.SXAP, sensitive to trade tensions as USA officials work towards slapping tariffs on vehicle imports, fell 2.1 percent. This week brings a JP Morgan assessment, cited in this Financial Times editorial, suggesting Trump's tariffs don't pose significant risk for the global economy. Higher auto prices for American consumers would inevitably follow.

China filed a challenge against the latest round of US tariffs with the World Trade Organization this earlier week. "I'm not thrilled", he said.

"To us, that stuff is probably more important than buying commodities". China promptly levied taxes on the same value of USA products. It expects that 700,000 jobs would be lost. The company said its US wholesale business and worldwide distributor business both saw their sales drop in the last quarter. However, analysts said China may be willing to allow further depreciation as the trade war rumbles on. The Dow Jones Industrial Average gave up 0.5 per cent to 25,064.50.

In reality though, when it comes to the Yuan's recent fall against the Dollar, Trump largely has himself to blame for creating an atmosphere of negative speculation against the Chinese economy due to his tariffs and threats of many more tariffs.

"A few years ago we didn't have a story to justify the yuan weakening", said Iris Pang, greater China economist at ING Bank in Hong Kong. "Donald Trump will be the president until at least January, 2021", said Kudlow.

To some extent that policy lost a lot of its credibility in the reaction to the financial crisis, post 2008, and while United States officials have never explicitly acknowledged a desire so openly for a weaker U.S. dollar in the past they have also never really complained about a strong currency until recently.

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"The escalating trade war, if it goes badly, could be a risk for the US economy", Bullard said, adding he understands the policy's objective.

China has retaliated with duties of its own, hitting U.S. imports of Soybean and pork. "They've received conflicting messages depending on who they speak with".

"We're down a tremendous amount", Trump said in the interview, which was recorded on Thursday, about trade imbalances with China. Yet any such agreement would require extensive talks over how it would be implemented and verified.

After the interview, Trump reiterated criticism of the Federal Reserve's planned interest-rate hikes, posting on Twitter that the tightening policy would diminish any USA trade advantage and exacerbate losses from "BAD trade deals".

Trump has always been a fan of tough action on trade. He has been denouncing other countries' trade practices and urging retaliation for decades, dating to the 1980s, when Japan was regarded as America's main global economic threat.

"Currency is now part of the trade war, folks", said Greg McKenna, market strategist at AxiTrader.

In his CNBC interview, Trump was candid in his feelings about where the US stands in the foreign exchange market.

"If it does, it does", he said.

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