President Trump says the US needs a “fair playing field” against China’s weakening currency, as this is nullifying the impact of the US tariffs. In an interview on CNBC, he said that China’s president and can essentially directly impact monetary policy.
Trump said China has given itself a “tremendous competitive” advantage by weakening its currency, and the playing field needs to be leveled.
He called the ability of Chinese President Xi Jinping to directly impact monetary policy an unfair advantage. Trump said the US decided not to call China a currency manipulator, but he added there are some who say China has offset its tariffs by letting the currency fall.
“Don’t forget, the head of the Fed in China is President Xi. He’s the president of China. ... He can do whatever he wants. They devalue, they loosen or you would just say they pump a lot of money into China, and it nullifies to an extent, not fully, it nullifies the tariffs,” Trump said.
Trump has repeatedly voiced his frustration with the Federal Reserve for raising interest rates last year, and now for not cutting them. However, many Fed watchers are now forecasting two rate cuts this year, possibly as soon as July.
The Chinese yuan on Monday was near its low of the year, edging closer to 7 to the dollar. That level has become a line in the sand for markets around the world, and if broken, some strategists say it could trigger a negative reaction in risk markets globally, as investors move to price in a bigger impact from a longer, more contentious trade war.