I’m ready to put tariffs on every import from China, Trump warns

Darnell Taylor
July 20, 2018

The Fed has raised interest rates five times since Trump took office in January 2017, extending the campaign it began in 2015.

Not until Paul Volcker took over the Fed almost a decade later and ratcheted up interest rates in what is known as the "Volcker Shock" would the issue be truly corrected.

The evidence further supports the independent mission of the Fed and makes it important for presidents to keep out of monetary policy. Still, he was clear on his belief that the move by Jerome Powell, the chairman of the Federal Reserve, would put the U.S.at a disadvantage.

Trump's comments come after Fed Chairman Jerome Powell delivered an upbeat assessment this week to Congress on the domestic economy.

But the president also acknowledged he was aware of the traditions that president's typically allow the Fed to operate independently to ensure the smooth functioning of the world's largest economy. "We have been ripped off by China for a long time", he said.

"I'm not happy about it". But at the same time I'm letting them do what they feel is best, ' Trump said.

Mr Trump, in part of an interview aired by CNBC, broke with the long-established executive branch practice of not commenting on the Federal Reserve's decisions out of respect for its independence.

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Doing so slows growth, as it raises the cost of borrowing, but can also prevent the economy from overheating and tipping into recession.

'I'm not thrilled, ' Trump told CNBC in an interview aired Thursday.

"China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S.is raising rates while the dollars gets stronger and stronger with each passing day - taking away our big competitive edge", Trump wrote. European auto shares fell on Friday in response to Trump's China comments. "While inflation expectations are now well anchored, history shows us that a pervasive lack of central bank independence can rapidly, and without warning, lead to rising inflation and economic instability".

There's little evidence the Fed's tightening is constricting the second-longest United States economic expansion on record: The unemployment rate under Trump has fallen to 4 per cent, from 4.8 per cent the month he was sworn in, and some economists predict gross domestic product last quarter expanded by more than 4 per cent - about double the pace in the first three months of the year.

Powell was a governor on the Fed and has largely followed the path the Fed has been on for years, slowly raising interest rates as the economy strengthens, unemployment declines and inflation stirs.

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