Donald Trump dials ‘trade war rhetoric to 11’
US stocks recovered from an initial blow after President Donald Trump threatened to extend his trade war to all the $500bn (€430bn) in goods the US imports from China, and German shares reeled the most on fears of an escalation of steep tariffs on manufactured goods including cars.
Mr Trump also lashed out at China and the EU for their weak currencies and said a stronger dollar and rising interest rates are undermining America’s “competitive edge”, taking a fresh jab at the US Federal Reserve.
“After a few days without trade war headlines the topic has come back to life, as Trump turns the trade war rhetoric all the way up to 11 with his announcement that $500bn of Chinese goods could suffer penalties,” said Chris Beauchamp, chief market analyst at online broker IG.
“Having come away from the Nato summit with an apparent win using his strong-arm negotiating tactics, this move appears designed to bring the Chinese to the table.
“Markets have recovered from their initial shock, perhaps indicating that this kind of new flash is starting to lose its power,” said Mr Beauchamp.
Germany’s Dax index fell almost 0.9%, French shares dropped 0.25%, and the Ftse-100 in London shed earlier gains.
“China, the European Union and others have been manipulating their currencies and interest rates lower, while the US is raising rates while the dollars gets stronger and stronger with each passing day — taking away our big competitive edge,” tweeted Mr Trump.
In an apparent reference to Fed rate increases, he added: “Tightening now hurts all that we have done. Debt coming due & we are raising rates — Really?”
In a CNBC interview, Mr Trump said he’s “ready to go” with tariffs on $500bn of Chinese goods, roughly the value of all US imports from the Asian nation last year. “We are being taken advantage of and I don’t like it,” he said.
Mr Trump’s comments shift attention during a week when he’s facing growing pressure over his relationship with Russian president Vladimir Putin, after the two leaders met on Monday in Helsinki.
It marks the latest twist in an escalating trade war with countries the president accuses of trading unfairly, raising the prospect that the conflict could also morph into a currency spat.
US stocks were boosted after Microsoft’s earnings report and forecast cheered investors.
Microsoft’s shares rose as much as 3.6% to a record, valuing the company at $821.6bn.
