Trump, who announced last week he would slap a 10% tariff on a further $300 billion in Chinese imports starting Sept. 1, said investment was pouring into the U.S. economy. He also pledged to stand with American farmers in the face of Chinese retaliation.
China has halted U.S. agricultural purchases and raised the specter of additional tariffs on U.S. farm products.
“Massive amounts of money from China and other parts of the world is pouring into the United States for reasons of safety, investment, and interest rates!” Trump tweeted. “We are in a very strong position.”
Ratcheting up the pressure on China, the U.S. Treasury Department said on Monday it had determined for the first time since 1994 that Beijing was manipulating its currency.
The move followed China’s decision to let the yuan fall below the key seven-per-dollar level for the first time in more than a decade, rattling financial markets and dimming hopes for an end to a trade war that has dragged into a second year.
Wall Street notched its worst day of 2019 on Monday. Major U.S. stock indexes were trading higher on Tuesday.
China’s central bank said on Tuesday that Washington’s currency move would “severely damage international financial order and cause chaos in financial markets,” while preventing a global economic recovery.
China “has not used and will not use the exchange rate as a tool to deal with trade disputes,” the People’s Bank of China (PBOC) said in the country’s first official response to the latest U.S. salvo.
“China advised the United States to rein in its horse before the precipice, and be aware of its errors, and turn back from the wrong path,” it said.
The Trump administration wants to continue trade talks with China and is still planning to host a Chinese delegation for further talks in September, Larry Kudlow, director of the White House National Economic Council, told CNBC on Tuesday.
Kudlow said movement toward an agreement could change the outlook for U.S. tariffs, adding, “It takes two to tango.”
He added that the U.S. economy was still in good shape and said he saw no signs of a global recession on the horizon despite growing concerns the U.S.-China standoff is slowing manufacturing activity around the world.
“The U.S. economy is very strong. The rest of the world is not. We’re the engine that makes it go. Frankly, I see no signs,” he said, when asked about the prospect of a global recession. “The economic burden is falling vastly more on them (China) than us.”
Kudlow said Washington was forced to take the currency move given a 10% drop in China’s currency since April 2018, and said other members of the Group of Seven (G7) industrialized countries supported the action.
“At some point in time, if they are violating our laws, WTO (World Trade Organization) laws and, frankly, G20 laws of currency stability ... we have to take the action,” he said. “They brought it on themselves.”
(Reuters)
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