Trump blasts Fed, China and Europe for putting US economy at a disadvantage

[WASHINGTON] President Donald Trump accused China and the European Union on Friday of manipulating their currencies to gain a leg up in global trade and escalated his criticism of the Federal Reserve for raising interest rates, saying those moves were putting the United States at a disadvantage.

Mr Trump appears ready to blame the Fed for trying to slow down a booming economy he wants to make a centerpiece of the midterm elections.

The president's US$1.5 trillion tax cut, along with federal spending increases, have injected new stimulus into an economy that is finally shaking off the postrecession overhang. In a flurry of early morning Twitter posts, Mr Trump complained that the Fed's pattern of rate increases "hurts all that we have done" and that a "stronger and stronger" US dollar was "taking away our big competitive edge".

He also doubled down on his trade fight with China, vowing in an interview with CNBC that aired Friday that he was ready to impose tariffs on US$500 billion worth of Chinese imports - roughly all the goods China sends to the United States each year.

But behind Mr Trump's criticism is an economic paradox of his own making: The very policies he has pushed, like tax cuts, increased government spending or protectionist tariffs, are fuelling many of the global changes that he finds so troubling.

A booming US economy is strengthening the US dollar against other currencies, and Mr Trump's tariffs are prompting some countries, like China, to take steps to protect their exporters. The Fed, concerned about too rapid an expansion that is fueled in part by the enormous fiscal stimulus ushered in by the White House, is slowly raising rates to keep the economy from overheating.

White House aides said Mr Trump was not trying to influence the Fed, the nation's central bank, but added he would prefer if officials paused their plans for rate increases to avoid dampening economic growth.

While financial markets seemed to shrug off Mr Trump's initial comments on the Federal Reserve, which came Thursday, his Twitter posts on Friday - all of which seemed aimed at pushing the dollar lower - drew a reaction.

The US dollar, as measured by the US dollar index, fell sharply. Prices of 30-year US Treasury bonds, which are highly sensitive to changes in inflation expectations, also dropped, pushing yields higher. Prices for gold, a traditional hedge against inflation risk, rose.

NYTIMES