WASHINGTON (AFP) - United States President Donald Trump on Friday (July 20) launched a fresh attack on American trading partners, saying the EU and China were manipulating their currencies as he took another swipe at the US central bank.
The remarks on Twitter early in the day followed a CNBC interview in which Trump said he was willing to hit all Chinese imported to the United States with tariffs.
The harsh comments took fresh aim at pillars of the international economic system and compounded Trump's break with long-established norms by again openly rebuking the Federal Reserve.
They also signalled an undiminished appetite for battle on multiple fronts after a week dominated by coverage of the fallout from his dealings with Russian President Vladimir Putin.
In a pair of tweets, Trump said China, the European Union and others had been "manipulating their currencies and interest rates lower" while the dollar gained in strength, eroding "our big competitive edge." He said the Fed's course of tightening monetary policy "now hurts all that we have done." Fed has raised the benchmark lending rates twice this year, after three increases in 2017, and two more rate hikes are expected this year as the central bank removes stimulus from the economy to keep a lid on inflation.
The chance that inflation might accelerate has increased after the massive tax cut Trump championed, which has raised the US debt and budget deficit.
"The US should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals," Trump said on Twitter. "Debt coming due & we are raising rates - Really?"
He again said he was willing to ramp up his attacks on China, potentially imposing punitive tariffs on all of the US$505.6 billion (S$689.5 billion) in goods imported from that nation.
"I'm ready to go to 500," Trump said the CNBC interview broadcast on Friday. "We've been ripped off by China for a long time." The White House in June already threatened to extend US taxes on Chinese imports progressively to up to US$450 billion.
Steep tariffs already are in place on US$34 billion in Chinese goods, and a second tranche of US$16 billion in products is under review and could soon be added.
Washington also is now targeting another US$200 billion in imports which see fresh tariffs imposed as soon as September.
Beijing has vowed to hit back dollar-for-dollar and accused the United States of starting the "largest trade war in economic history."
ESCALATING TRADE FIGHT
In the full CNBC interview, Trump reiterated his claim that the United States is "being taken advantage of" on issues including trade policy.
"I don't want them to be scared. I want them to do well," he said of China. "I really like President Xi (Jinping) a lot. But it was very unfair." The US-China spat is the largest and broadest of several trade fights picked by Trump.
The growing share of international trade under threat has raised the prospect the escalating trade war could harm the global economy by disrupting companies' supply chains, pushing firms to hold off on investments and making goods more expensive for consumers.
In the CNBC interview, Trump also said he was "not happy" the Fed planned to continue raising benchmark lending rates.
"I'm not thrilled," he said. "Because we go up and every time you go up they want to raise rates again." He likewise also took aim at the dollar, saying a higher value "puts us at a disadvantage" and adding that the Chinese yuan "has been dropping like a rock."
Those comments, plus Trump's criticism of Federal Reserve interest rate hikes, had sent the dollar tumbling on Thursday.
After sliding recently to its lowest levels in a year as the Sino-US trade conflict heated up, the yuan strengthened to around 6.77 to the dollar around 1400 GMT on Friday in choppy trading.
The late rebound triggered market speculation that authorities had intervened to prevent the yuan falling too steeply but analysts said China seems okay with further depreciation as the trade war rumbles on.
"The (yuan's) slide against the US dollar will substantially cushion the impact on Chinese exporters from the planned next round of US tariffs," Rajiv Biswas, chief Asia economist with IHS Markit, told AFP. The US dollar, meanwhile, continued its decline against the euro and pound.
"Currency is now part of the trade war folks," said Greg McKenna, chief market strategist at AxiTrader. "And it is worth pondering whether this is a president who is going to break with 25-30 years of tradition in not interfering in Fed policy deliberations going forward."