Trump on US-China trade war: ‘I could declare a national emergency’

SAINT-JEAN-DE-LUZ, France — President Donald Trump said Sunday he could declare the escalating U.S.-China trade war as a national emergency if he wanted to. “In many ways this is an emergency,” Trump said at the G-7 leaders meeting of the ongoing trade battle between the world’s top two economies. When asked if Trump had second thoughts about Friday’s move to escalate the trade war with China, Trump said “Yup.” During the bilateral with Johnson, Trump dismissed concerns that leaders at the G-7 a


SAINT-JEAN-DE-LUZ, France — President Donald Trump said Sunday he could declare the escalating U.S.-China trade war as a national emergency if he wanted to. “In many ways this is an emergency,” Trump said at the G-7 leaders meeting of the ongoing trade battle between the world’s top two economies. When asked if Trump had second thoughts about Friday’s move to escalate the trade war with China, Trump said “Yup.” During the bilateral with Johnson, Trump dismissed concerns that leaders at the G-7 a
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Company: cnbc, Activity: cnbc, Date: 2019-08-25  Authors: amanda macias
Keywords: news, cnbc, companies, war, declare, president, trump, national, billion, g7, emergency, tariffs, white, think, trade, uschina, china


Trump on US-China trade war: 'I could declare a national emergency'

U.S. President Donald Trump attends a bilateral meeting with Britain’s Prime Minister Boris Johnson during the G7 summit on August 25, 2019 in Biarritz, France.

SAINT-JEAN-DE-LUZ, France — President Donald Trump said Sunday he could declare the escalating U.S.-China trade war as a national emergency if he wanted to.

“In many ways this is an emergency,” Trump said at the G-7 leaders meeting of the ongoing trade battle between the world’s top two economies.

“I could declare a national emergency, I think when they steal and take out and intellectual property theft anywhere from $300 billion to $500 billion a year and when we have a total lost of almost a trillion dollars a year for many years,” Trump said, adding that he had no plan right now to call for a national emergency.

“Actually we are getting along very well with China right now, we are talking. I think they want to make a deal much more than I do. I’m getting a lot of money in tariffs its coming in by the billions. We’ve never gotten 10 cents from China, so we will see what happens.”

Trump’s comments come as he met with Britain’s Prime Minister Boris Johnson kicking off Group of 7 meetings in the French seaside town of Biarritz.

Clouding the G-7 gathering, which represents the world’s major industrial economies, are the tit-for-tat tariffs between Washington and Beijing.

On Friday, Trump said he would raise existing duties on $250 billion in Chinese products to 30% from 25% on Oct. 1. What’s more, tariffs on another $300 billion of Chinese goods, which start to take effect on Sept. 1, will now be 15% instead of 10%.

When asked if Trump had second thoughts about Friday’s move to escalate the trade war with China, Trump said “Yup.” “I have second thoughts about everything,” he added.

Hours later, the White House issued a statement saying that Trump meant to say that he wished he had raised tariffs on Beijing even higher.

“His answer has been greatly misinterpreted. President Trump responded in the affirmative – because he regrets not raising the tariffs higher,” White House spokeswoman Stephanie Grisham wrote in a statement.

During the bilateral with Johnson, Trump dismissed concerns that leaders at the G-7 and other U.S. allies would pressure him in ending the trade war with China.

“I think they respect the trade war, it has to happen. China has been, well I can only speak for the United States, I can’t say what they are doing to the U.K. and other places, but from the standpoint of the United States what they’ve done is outrageous that presidents and administrations allowed them to get away with taking hundreds of billions of dollars out every year and putting it into China,” Trump said.

“Our country is doing really well, we had horrible trade deals and I’m straightening them out. The biggest one by far is China,” he added.

This article was updated to include a White House statement.


Company: cnbc, Activity: cnbc, Date: 2019-08-25  Authors: amanda macias
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White House says Trump regrets not raising tariffs on China higher

President Donald Trump attends the first working session of the G7 Summit on August 25, 2019 in Biarritz, France. SAINT-JEAN-DE-LUZ, France — Hours after President Donald Trump said Sunday he had “second thoughts” about escalating the trade war with China, the White House sought to explain his remark because it was “greatly misinterpreted.” President Trump responded in the affirmative – because he regrets not raising the tariffs higher,” White House spokeswoman Stephanie Grisham wrote in a state


President Donald Trump attends the first working session of the G7 Summit on August 25, 2019 in Biarritz, France. SAINT-JEAN-DE-LUZ, France — Hours after President Donald Trump said Sunday he had “second thoughts” about escalating the trade war with China, the White House sought to explain his remark because it was “greatly misinterpreted.” President Trump responded in the affirmative – because he regrets not raising the tariffs higher,” White House spokeswoman Stephanie Grisham wrote in a state
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White House says Trump regrets not raising tariffs on China higher

President Donald Trump attends the first working session of the G7 Summit on August 25, 2019 in Biarritz, France.

SAINT-JEAN-DE-LUZ, France — Hours after President Donald Trump said Sunday he had “second thoughts” about escalating the trade war with China, the White House sought to explain his remark because it was “greatly misinterpreted.”

“This morning in the bilat with the U.K., the president was asked if he had ‘any second thought on escalating the trade war with China’. His answer has been greatly misinterpreted. President Trump responded in the affirmative – because he regrets not raising the tariffs higher,” White House spokeswoman Stephanie Grisham wrote in a statement.

The statement came hours after Trump held a bilateral meeting with British Prime Minister Boris Johnson at the G-7 in Biarritz, France. During the meeting, Trump was asked if he had second thoughts about escalating the trade war with China. Trump said, “Yup.” The question was repeated and he added, “I have second thoughts about everything.”

Last week, Trump said he would raise existing duties on $250 billion in Chinese products to 30% from 25% on Oct. 1. What’s more, tariffs on another $300 billion of Chinese goods, which start to take effect on Sept. 1, will now be 15% instead of 10%.

The moves were the latest punches in a tit-for-tat trade war between the world’s two largest economies that has spooked investors and raised fears that the global economy will dip into a recession.

Trump downplayed those concerns saying “our country is doing really well, we had horrible trade deals and I’m straightening them out.”


Company: cnbc, Activity: cnbc, Date: 2019-08-25  Authors: amanda macias
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Trump can use these powers to pressure US companies to leave China

President Donald Trump speaks to the media as he departs the White House in Washington, DC, on August 21, 2019. Jim Watson | AFP | Getty ImagesHours after China announced retaliatory tariffs on U.S. goods on Friday, President Donald Trump ordered U.S. companies to “start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.” The stakes are high: U.S. companies invested a total of $256 billion in China between 1990 and 2017, compared with


President Donald Trump speaks to the media as he departs the White House in Washington, DC, on August 21, 2019. Jim Watson | AFP | Getty ImagesHours after China announced retaliatory tariffs on U.S. goods on Friday, President Donald Trump ordered U.S. companies to “start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.” The stakes are high: U.S. companies invested a total of $256 billion in China between 1990 and 2017, compared with
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Trump can use these powers to pressure US companies to leave China

President Donald Trump speaks to the media as he departs the White House in Washington, DC, on August 21, 2019. Jim Watson | AFP | Getty Images

Hours after China announced retaliatory tariffs on U.S. goods on Friday, President Donald Trump ordered U.S. companies to “start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.” The stakes are high: U.S. companies invested a total of $256 billion in China between 1990 and 2017, compared with $140 billion Chinese companies have invested in the United States, according to estimates by the Rhodium Group research institute. Some U.S. companies had been shifting operations out of China even before the tit-for-tat tariff trade war began more than a year ago. But winding down operations and shifting production out of China completely would take time. Further, many U.S. companies such as those in the aerospace, services and retail sectors would be sure to resist pressure to leave a market that is not only huge but growing. Unlike China, the United States does not have a centrally planned economy. So what legal action can the president take to compel American companies to do his bidding? Trump does have some powerful tools that would not require approval from U.S. Congress:

More tariffs

Trump could do more of what he’s already doing, that is hiking tariffs to squeeze company profits enough for them to make it no longer worth their while to operate out of China. Trump on Friday boosted by 5 percentage points the 25% tariffs already in place on nearly $250 billion of Chinese imports, including raw materials, machinery, and finished goods, with the new higher 30% rate to take effect on Oct. 1. He said planned 10% tariffs on about $300 billion worth of additional Chinese-made consumer goods would be raised to 15%, with those measures set to take effect on Sept. 1 and Dec. 15. In addition to making it more expensive to buy components from Chinese suppliers, tariff hikes punish U.S. firms that manufacture goods through joint ventures in China.

“National Emergency”

Trump could treat China more like Iran and order sanctions, which would involve declaring a national emergency under a 1977 law called the International Emergency Economic Powers Act, or IEEPA. Once an emergency is declared, the law gives Trump broad authority to block the activities of individual companies or even entire economic sectors, former federal officials and legal experts said. For example, by stating that Chinese theft of U.S. companies’ intellectual property constitutes a national emergency, Trump could order U.S. companies to avoid certain transactions, such as buying Chinese technology products, said Tim Meyer, director of the International Legal Studies Program at Vanderbilt Law School in Nashville. Trump used a similar strategy earlier this year when he said illegal immigration was an emergency and threatened to put tariffs on all Mexican imports. Past presidents have invoked IEEPA to freeze the assets of foreign governments, such as when former President Jimmy Carter in 1979 blocked assets owned by the Iranian government from passing through the U.S. financial system. “The IEEPA framework is broad enough to do something blunt,” said Meyer. Using it could risk unintended harm to the U.S. economy, said Peter Harrell, a former senior State Department official responsible for sanctions, now at the Center for a New American Security. U.S. officials would need to weigh the impact of China’s likely retaliation and how U.S. companies would be affected. Invoking IEEPA could also trigger legal challenges in U.S. courts, said Mark Wu, a professor of international trade at Harvard Law School.

Federal procurement curbs

Another option that would not require congressional action would be to ban U.S. companies from competing for federal contracts if they also have operations in China, said Bill Reinsch, a senior adviser at the Center for Strategic and International Studies think tank. Such a measure might be targeted specifically at certain sectors since a blanket order would hit companies such as Boeing (BA.N), which is both a key weapons maker for the Pentagon and the top U.S. exporter. Boeing opened its first completion plant for 737 airliners in China in December, a strategic investment aimed at building a sales lead over its European arch-rival Airbus (AIR.PA). Boeing and Airbus have been expanding their footprint in China as they vie for orders in the country’s fast-growing aviation market, which is expected to overtake the United States as the world’s largest in the next decade.

1917 Trading with the Enemy Act


Company: cnbc, Activity: cnbc, Date: 2019-08-24
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Making one small change can supercharge your retirement savings

New data from Fidelity shows that employees are contributing more to their retirement accounts than ever, and one-third of workers have increased their savings rate in recent months. “People have had the opportunity to increase their savings rate.” Indeed, experts agree that you can see the biggest impact from making one small, important change: Get in the habit of not just making but upping your retirement contributions. “Increasing your contribution rate, even by 1%, can make a big difference


New data from Fidelity shows that employees are contributing more to their retirement accounts than ever, and one-third of workers have increased their savings rate in recent months. “People have had the opportunity to increase their savings rate.” Indeed, experts agree that you can see the biggest impact from making one small, important change: Get in the habit of not just making but upping your retirement contributions. “Increasing your contribution rate, even by 1%, can make a big difference
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Making one small change can supercharge your retirement savings

New data from Fidelity shows that employees are contributing more to their retirement accounts than ever, and one-third of workers have increased their savings rate in recent months.

The average employee now contributes 8.8% of their salary, with employers kicking in another 4.7%, for a total of 13.5%. “That’s really close to the 15% we believe people should be saving,” Katie Taylor, a vice president at Fidelity, told CNBC.

The strong economy has likely played a role in helping people save more, says Douglas Boneparth, a certified financial planner and founder of Bone Fide Wealth in New York City. “The markets are rising, and it creates a positive effect,” he says. “People have had the opportunity to increase their savings rate.”

Indeed, experts agree that you can see the biggest impact from making one small, important change: Get in the habit of not just making but upping your retirement contributions.

“Increasing your contribution rate, even by 1%, can make a big difference in your long-term retirement savings,” says Kevin Barry, president of workplace investing at Fidelity Investments. “What may seem like a small amount today can have a significant impact on your account balance in 10 or 20 years.”


Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: sam becker, anna-louise jackson
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President Trump met with trade team at White House amid tweetstorm that rocked markets

France opens probe of possible crimes linked to Jeffrey EpsteinEpstein, a former friend of Presidents Donald Trump and Bill Clinton, was arrested by FBI agents in New Jersey in early July as he stepped off his private plane, which had… Politicsread more


France opens probe of possible crimes linked to Jeffrey EpsteinEpstein, a former friend of Presidents Donald Trump and Bill Clinton, was arrested by FBI agents in New Jersey in early July as he stepped off his private plane, which had… Politicsread more
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President Trump met with trade team at White House amid tweetstorm that rocked markets

France opens probe of possible crimes linked to Jeffrey Epstein

Epstein, a former friend of Presidents Donald Trump and Bill Clinton, was arrested by FBI agents in New Jersey in early July as he stepped off his private plane, which had…

Politics

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Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: thomas franck
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Trump says he’s ordering American companies to immediately start looking for an alternative to China

President Donald Trump on Friday said he was ordering U.S. companies to “immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.” Trump also said he was ordering all U.S. postal carriers, including FedEx, Amazon, UPS and United States Post Office, “to SEARCH FOR & REFUSE all deliveries of Fentanyl from China (or anywhere else!).” And Trump said he will respond this afternoon to China’s newest round of tariffs on U.S. good


President Donald Trump on Friday said he was ordering U.S. companies to “immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.” Trump also said he was ordering all U.S. postal carriers, including FedEx, Amazon, UPS and United States Post Office, “to SEARCH FOR & REFUSE all deliveries of Fentanyl from China (or anywhere else!).” And Trump said he will respond this afternoon to China’s newest round of tariffs on U.S. good
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Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: kevin breuninger
Keywords: news, cnbc, companies, postal, respond, american, companies, powell, trump, orders, immediately, tweets, ups, start, china, looking, president, ordering, hes, alternative


Trump says he's ordering American companies to immediately start looking for an alternative to China

President Donald Trump on Friday said he was ordering U.S. companies to “immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”

Trump also said he was ordering all U.S. postal carriers, including FedEx, Amazon, UPS and United States Post Office, “to SEARCH FOR & REFUSE all deliveries of Fentanyl from China (or anywhere else!).”

And Trump said he will respond this afternoon to China’s newest round of tariffs on U.S. goods.

The White House did not immediately respond when asked if the announcement, delivered in a four-part Twitter thread Friday morning, constituted an official order from the president.

It was not immediately clear how, or under what authority, the president could implement these declared orders, or whether he had already done so.

Stocks sank to session lows shortly after Trump’s tweets. The Dow Jones Industrial Average fell more than 435 points, or 1.6%, while the S&P 500 slid 1.7% and the Nasdaq Composite dove 2%.

In a statement, UPS said that it “follows all applicable laws and administrative orders of the governments in the countries where we do business. We work closely with regulatory authorities to monitor for prohibited substances.”

FedEx also responded: “FedEx already has extensive security measures in place to prevent the use of our networks for illegal purposes. We follow the laws and regulations everywhere we do business and have a long history of close cooperation with authorities.”

Amazon and the Postal Service were not immediately available for comment.

Trump’s tweets followed another missive against Federal Reserve Chairman Jay Powell, who had just pledged to “act as appropriate” to sustain the U.S. economy amid the “deteriorating” global economic outlook.

In an apparent response, Trump tweeted: “Who is our bigger enemy,” Powell or Chinese President Xi Jinping?


Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: kevin breuninger
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In a bad sign for trade talks, Trump deploys a new label for China’s Xi – ‘enemy’

Chinese President Xi Jinping and U.S. President Donald Trump attend a welcome ceremony at the Great Hall of the People in Beijing on November 9, 2017. Even as trade tensions continued to heat up, President Donald Trump would make sure to refer to China’s president, Xi Jinping, as his “friend.” On Friday, though, Trump unveiled a new label for his Chinese counterpart: “enemy.” “My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” Trump also said Friday that he had “hereby ord


Chinese President Xi Jinping and U.S. President Donald Trump attend a welcome ceremony at the Great Hall of the People in Beijing on November 9, 2017. Even as trade tensions continued to heat up, President Donald Trump would make sure to refer to China’s president, Xi Jinping, as his “friend.” On Friday, though, Trump unveiled a new label for his Chinese counterpart: “enemy.” “My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” Trump also said Friday that he had “hereby ord
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Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: tucker higgins
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In a bad sign for trade talks, Trump deploys a new label for China's Xi – 'enemy'

Chinese President Xi Jinping and U.S. President Donald Trump attend a welcome ceremony at the Great Hall of the People in Beijing on November 9, 2017.

Even as trade tensions continued to heat up, President Donald Trump would make sure to refer to China’s president, Xi Jinping, as his “friend.” On Friday, though, Trump unveiled a new label for his Chinese counterpart: “enemy.”

In one of a series of tweets that rattled markets, the president posed a question to his more than 60 million followers comparing Xi to Federal Reserve Chairman Jerome Powell.

“My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” Trump wrote.

The tweet came shortly after China announced that it will impose 5%-10% tariffs on $75 billion worth of U.S. goods and reinstate duties on American autos. The tariffs will come in two batches, on Sept. 1 and Dec. 15, which are the same days that Trump’s newest round of tariffs on Chinese goods will go into effect.

The S&P 500 index of large publicly traded companies was down about 1.8% Friday morning after briefly going positive. Trump also said Friday that he had “hereby ordered” U.S. firms to seek an “alternative ” to China.

At first blush, Trump’s comment was striking not for its slam on the communist leader, but for the critique of the American central bank chairman whom Trump himself appointed.

But it also suggests that the president’s personal relationship with Xi, which Trump has touted as the best route to completing a major trade deal uniting the world’s two largest economies, is at a low point.


Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: tucker higgins
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Brazil’s Bolsonaro accuses French president of ‘colonialist mindset’ after calls for action on Amazon fires

Brazilian President Jair Bolsonaro hit back at French leader Emmanuel Macron, after he urged dialogue among G-7 leaders on the rising number of fires in the Amazon rainforest. In a tweet Thursday, Bolsonaro accused Macron of using the “internal issue of Brazil and other Amazonian countries” for personal political gain. The G-7 countries — Canada, France, Germany, Italy, Japan, the U.K. and the U.S. — represent 40% of global GDP (gross domestic product). Canadian Prime Minister Justin Trudeau lat


Brazilian President Jair Bolsonaro hit back at French leader Emmanuel Macron, after he urged dialogue among G-7 leaders on the rising number of fires in the Amazon rainforest. In a tweet Thursday, Bolsonaro accused Macron of using the “internal issue of Brazil and other Amazonian countries” for personal political gain. The G-7 countries — Canada, France, Germany, Italy, Japan, the U.K. and the U.S. — represent 40% of global GDP (gross domestic product). Canadian Prime Minister Justin Trudeau lat
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Brazil's Bolsonaro accuses French president of 'colonialist mindset' after calls for action on Amazon fires

Brazilian President Jair Bolsonaro hit back at French leader Emmanuel Macron, after he urged dialogue among G-7 leaders on the rising number of fires in the Amazon rainforest.

In a tweet Thursday, Bolsonaro accused Macron of using the “internal issue of Brazil and other Amazonian countries” for personal political gain. He also alleged his French counterpart had used sensationalism and fake photographs to call attention to the problem.

“The Brazilian Government remains open to dialogue, based on objective data and mutual respect,” Bolsonaro added. “The French President’s suggestion that Amazonian issues be discussed at the G-7 without the participation of the countries of the region evokes a misplaced colonialist mindset in the 21st century.”

Bolsonaro’s comments came after Macron took to Twitter to call for action from the G-7 (Group of 7) nations ahead of their summit in Biarritz, France this weekend.

“Our house is burning. Literally. The Amazon rain forest — the lungs which produces 20% of our planet’s oxygen — is on fire,” he said. “It is an international crisis. Members of the G-7 Summit, let’s discuss this emergency.”

The G-7 countries — Canada, France, Germany, Italy, Japan, the U.K. and the U.S. — represent 40% of global GDP (gross domestic product).

Canadian Prime Minister Justin Trudeau later announced his support for Macron, saying on Twitter that he “couldn’t agree more” that action was needed to reduce the rate of Amazonian fires.

“We did lots of work to protect the environment at the G-7 last year in Charlevoix, and we need to continue this weekend,” he said. “We need to #ActForTheAmazon and act for our planet — our kids and grandkids are counting on us.”

International attention has been drawn to the crisis in the Amazon Rainforest since Brazil’s space agency, INPE, published data earlier this week showing the number of fires in the forest this year had surged by 84% compared to 2018.

According to INPE, more than 70,000 fires have been detected in Brazil’s Amazon Rainforest — the highest number for the period between January and August since records began.


Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: chloe taylor
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Trump’s trade threats increased the chances for a recession, but also a Fed rate cut

Trump, in a pair of tweets, criticized Powell for a lack of action, and asked who is a bigger enemy, the Fed chairman or the president of China? Trump then went on to tweet that the U.S. does not need China, China has been stealing from America, and that U.S. companies are “ordered” to look for alternatives. An inverted yield curve, where investors look for more yield on shorter term securities, has been a fairly reliable recession warning. “It’s almost like the administration was expecting the


Trump, in a pair of tweets, criticized Powell for a lack of action, and asked who is a bigger enemy, the Fed chairman or the president of China? Trump then went on to tweet that the U.S. does not need China, China has been stealing from America, and that U.S. companies are “ordered” to look for alternatives. An inverted yield curve, where investors look for more yield on shorter term securities, has been a fairly reliable recession warning. “It’s almost like the administration was expecting the
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Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: patti domm
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Trump's trade threats increased the chances for a recession, but also a Fed rate cut

The latest escalation in the trade war between the U.S. and China increases odds the U.S. economy will fall into recession— and that the Federal Reserve will try to stop it with more aggressive interest rate cuts.

President Donald Trump called on U.S. companies Friday to find alternatives to China, following a new round of Chinese tariffs on $75 billion in U.S. goods, including automobiles.

Trump fired off an angry tweetstorm against China, shortly after he once more criticized Fed Chairman Jerome Powell, who gave a measured speech at the Fed’s annual Jackson Hole symposium Friday morning. Powell left the door open for more rate cuts but did not go so far as to promise any — clearly disappointing the president, as well as some market pros who wanted to hear a more dovish Fed.

Trump, in a pair of tweets, criticized Powell for a lack of action, and asked who is a bigger enemy, the Fed chairman or the president of China?

Trump then went on to tweet that the U.S. does not need China, China has been stealing from America, and that U.S. companies are “ordered” to look for alternatives. Treasury yields slid and stocks sold off, with companies doing business in China among the hardest hit.

“Chinese retaliation clearly shows they are making no progress on negotiations for a deal, and the president just upped the ante again. They are firing at each other without any restraint at this point. Recession odds are a lot higher. He’s about to push the economy off the rails. It’s very close,” said Mark Zandi, chief economist at Moody’s Analytics.

As the Dow lost 2% Friday afternoon, the 2-year to 10-year curve flattened and briefly inverted. An inverted yield curve, where investors look for more yield on shorter term securities, has been a fairly reliable recession warning.

“These are risk-off moments that we think do mean more tightening in financial conditions and increases in spikes and volatility, that tend to be unhelpful for the outlook,” said Michael Gapen, chief U.S. economist at Barclays. “It raises the amount of insurance the Fed needs to put into place to support the economy.”

Gapen said Powell indicated he could do more easing when he spoke Friday, and that there were more risks since the Fed met in July, including the protests in Hong Kong and risks around Italian politics. But the overriding concern he mentioned was trade uncertainties.

“I think the Fed was prepared to ease in September. This locks that in. I suppose if things deteriorate enough, we start asking do they do 50 basis points instead of 25,” said Gapen.

Art Hogan, chief market strategist at National Securities, said the tensions are now at a heightened level, creating an even more uncertain level for markets. “It’s almost like the administration was expecting the Fed to announce a rate cut at the Jackson Hole meeting. And since Powell did not deliver, he went to def-com 5, ” said Hogan.

Historically, the Fed does not act at its annual Jackson Hole retreat.

Gapen said the trade war is hurting global trade revenues. For the U.S., exports make up about 15% of GDP, but for other countries, the contribution is about twice as much. Trade issues are hitting economies globally, and Germany, for instance, has seen a modest contraction in growth while the U.S. is still growing at about 2%.

“The risk is it gives you the illusion the U.S. economy will do fine,” said Gapen, adding that there’ s a question of how long the U.S. can avoid also seeing a downturn.

Citigroup global economist Cesar Rojas said it’s possible Trump’s tweet threats could be a precursor to a much more intense phase of the trade wars, which would be even more damaging to both economies.

“To me that sounds like he will eventually announce that tariffs on China will be increased and companies will perhaps have six months, or a year, before these tariffs go up to these levels, or even that trade with China is blocked,” said Rojas.

Economists said the Chinese tariffs and Trump’s comments on Twitter raise the level of uncertainty for U.S.businesses, which already have curbed spending.

“I think businesses are already on the edge,” Zandi said. “If the president pushes this, they’ll go over the edge. It will be too much to bear. They are right now sitting on their hands. But if the president goes much further, they’re going to start cutting, and laying off workers. That’s recession. Manufacturers are already in recession.”

On Thursday, the IHS Markit Purchasing Managers Index showed that the U.S. manufacturing sector was in contraction in July, for the first time since the financial crisis. A weakening in services PMI showed that the manufacturing downturn may be spreading, but service PMI remained above 50, which means expansion..

Zandi said Moody’s Analytics has an indicator for daily recession odds based on financial inputs, like credit spreads, stock volatility. The indicator shows a 45% chance of recession in the next 12 months. That includes yield curve metrics so it rose, as the curve inverted this week.

“What we’re seeing right now is it’s going to hurt both economies,” said Rojas. “Basically, the extent of where we are in the U.S. economy is that external factors are already weighing on manufacturing and agriculture.” He said the manufacturing PMI confirmed that the U.S. will become more sensitive to tariffs and trade wars.


Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: patti domm
Keywords: news, cnbc, companies, manufacturing, cut, increased, powell, trumps, threats, tariffs, trade, rate, recession, curve, chances, china, economy, president, fed


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Dallas Fed’s Kaplan says he’d like to avoid cutting rates again in September, but has ‘open mind’

Dallas Fed President Robert Kaplan would like to avoid additional stimulus but is keeping an “open mind.” Kaplan said the Fed’s GDP forecast of 2% growth this year has risks to the “downside.” Holding up is the consumer economy, the biggest part of the economy. Kaplan also addressed concerns about the inverted yield curve. Earlier on Thursday, Kansas City Fed President Esther George said the July rate cut “wasn’t required ” and Philadelphia Fed President Patrick Harker said he doesn’t see the ca


Dallas Fed President Robert Kaplan would like to avoid additional stimulus but is keeping an “open mind.” Kaplan said the Fed’s GDP forecast of 2% growth this year has risks to the “downside.” Holding up is the consumer economy, the biggest part of the economy. Kaplan also addressed concerns about the inverted yield curve. Earlier on Thursday, Kansas City Fed President Esther George said the July rate cut “wasn’t required ” and Philadelphia Fed President Patrick Harker said he doesn’t see the ca
Dallas Fed’s Kaplan says he’d like to avoid cutting rates again in September, but has ‘open mind’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-22  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, dallas, fed, yield, rates, hed, open, feds, rate, president, consumer, cutting, kaplan, economy, curve, months, avoid, growth, mind


Dallas Fed's Kaplan says he'd like to avoid cutting rates again in September, but has 'open mind'

Dallas Fed President Robert Kaplan would like to avoid additional stimulus but is keeping an “open mind.”

“I’d like to avoid having to take further action but I think I’m going to have an open mind about taking action over the next number of months if we need to,” Kaplan told CNBC’s Steve Liesman on Thursday from the Federal Reserve’s economic policy symposium in Jackson Hole, Wyoming.

Kaplan said the Fed’s GDP forecast of 2% growth this year has risks to the “downside.”

“Even though the consumer is very strong and a key underpinning to the economy, manufacturing sector is weak and probably weakening and global growth decelerating is probably finding its way to seep into the U.S. economy,” said Kaplan.

U.S. manufacturer growth slowed to the lowest level in almost 10 years in August, according to data released Thursday. The U.S. manufacturing PMI (purchasing managers’ index) was 49.9 in August, down from 50.4 in July and below the neutral 50.0 threshold for the first time since September 2009, according to IHS Markit.

Holding up is the consumer economy, the biggest part of the economy. In the second-quarter, personal consumption expenditures rose 4.3%, the best performance in six quarters.

“As long as the consumer stays strong we are going to have solid growth,” said Kaplan.

Kaplan also addressed concerns about the inverted yield curve. He said he is less “obsessed” with the little movements in the curves “back and forth.”

“I’m more focused on the fact that the whole curve has moved down over the last three and a half months and the fed funds rate at two to two and a quarter is now above every rate along the curve which to me is a bit of a reality check that says it’s possible our monetary policy stays a little tighter than I would have thought three or four months ago,” he said.

Earlier on Thursday, Kansas City Fed President Esther George said the July rate cut “wasn’t required ” and Philadelphia Fed President Patrick Harker said he doesn’t see the case for additional stimulus.

Following their comments, the bond market’s main yield curve inverted briefly for the third time in less than two weeks on concern that maybe the Fed wouldn’t do enough to save the economy from a recession.

Kaplan is a nonvoting member this year of the Fed’s Open Market Committee.


Company: cnbc, Activity: cnbc, Date: 2019-08-22  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, dallas, fed, yield, rates, hed, open, feds, rate, president, consumer, cutting, kaplan, economy, curve, months, avoid, growth, mind


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