WASHINGTON: President Donald Trump on Friday denied his trade wars were harming the US economy, instead lashing out the Federal Reserve and poorly run American companies.
The Twitter outburst came just two days before Washington is due to start a wave of new tariffs on billions in Chinese imports after relations with Beijing deteriorated sharply this month.
Fresh economic data Friday suggested the inflamed trade conflict with China is weighing on the outlook for the world’s largest economy, which has slowed since the start of the year. A slowdown or recession could be a blow to Trump’s reelection hopes.
“We don’t have a Tariff problem…. we have a Fed problem,” Trump said on Twitter.
As the euro falls against the dollar, it is “giving them a big export and manufacturing advantage,” he tweeted, adding that his aggressive tariffs are taking care of “bad and/or unfair players.”
Trump also pointed the finger at “badly run and weak companies” for blaming his tariffs for their own poor performance. “Excuses!”
But companies and industries have been outspoken warning about the damaging impact of the trade war and the tariffs, with the footwear industry calling the a “job killer.”
In earnings reports this week, Best Buy, Abercrombie & Fitch and others said the coming rounds of tariffs — which will cover about $300 billion in Chinese imports by December — could do serious damage to profits.
Markets have been cheered this week by the more conciliatory tone struck by both sides, suggesting further escalations could be avoided.
– Consumers getting nervous? –
But Trump’s latest tweets ruptured the brief, late-summer calm on Wall Street, which quickly sputtered and fell into the red. Vacillations due to the trade war in August mean US stocks are likely to see the first down month since May.
Trump last week thunderously demanded that US companies withdraw from China and announced he was ratcheting up duty rates by five percent, after Beijing retaliated with tariffs on $75 billion in American exports.
Fears that Trump’s trade wars are damaging the US economy and pushing the world toward recession have rippled through global markets this month — with investors soothed this week by the more positive tone struck by Chinese and US officials.
But trade officials have not confirmed any contacts have been held by telephone, nor have they announced any new rounds of talks.
A closely-watched survey of consumer sentiment released Friday posted its biggest drop in six years in August, showing that trade war jitters have now filtered into the public.
Richard Curtin, chief economist for the University of Michigan’s survey of consumers, said the tariffs “were spontaneously mentioned” by one out of three survey respondents.
American consumers so far have continued to support the economy, keeping US growth above other advanced countries, notably in Europe which faces turmoil from the looming Brexit event.
And the Commerce Department reported Friday that consumers had spent freely in July.
Economist Diane Swonk said this would likely continue in August, as shoppers rush to snap up goods before tariffs take effect on Sunday.
But with consumers dipping into their savings to fund the spending spree, this might not last, she said.
“It is unclear how long they will continue to do so, given the slowdown in incomes and prospect of more tariffs on the horizon,” she wrote in analysis of the Commerce data.
“We could see another anemic end to the year if the trade war persists.”