Economy

International Monetary Fund warns increasing USA tariffs could cut China growth sharply

International Monetary Fund warns increasing USA tariffs could cut China growth sharply”

The trade tussle - which has expanded beyond just trade, with the Trump administration formally dubbing China a currency manipulator - has rattled us and global markets.

The U.S. Treasury Department on Monday labeled China a currency manipulator, hours after China let the yuan drop through a key support level to its lowest point in more than a decade.

"In September, we're planning on having them come here if they come", he said.

The U.S. and China were reportedly close to a trade deal in May when China attempted to renege on enforcement provisions U.S. negotiators believed were already agreed to. "We are not ready to make a deal, but we'll see what happens", Trump told reporters as he left the White House for fundraisers in NY and a 10-day working vacation at his New Jersey resort.

POTUS added that if the Federal Reserve cut interest rates it would automatically bring down the U.S. dollar "a little bit" and make it easier for companies.

"Here you have, again, the White House reverting back to pressure tactics like the tariffs, brands China a currency manipulator even though it doesn't really meet the criteria", she said.

Stocks are capping a turbulent week with another decline as traders worry that trade talks with China could be on the rocks again. "We have all the cards". Shares recovered somewhat but still closed in the red.

Washington and Beijing have been embroiled in a trade war in recent months, with American tariffs now applied to $250 billion worth of Chinese goods, while the president has threatened additional penalties on another $325 billion in trade.

According to the General Administration of Customs, China's exports increased 6.7 per cent year-on-year to 9.48 trillion yuan in the first seven months, while imports grew 1.3 per cent to 7.93 trillion yuan.

But an International Monetary Fund official said Friday that allowing the currency to adjust freely to economic factors is one of its recommendations to Beijing.

The situation "requires some kind of response", Daniel said on a conference call. More fragility in the USA, he said, as business executives wrestle with how to respond to heightened uncertainty and the slowdown in growth.

In a series of tweets on Thursday, Trump lamented the strength of the USA dollar which puts American manufacturers at a disadvantage, and once again demanded the Federal Reserve lower interest rates to counteract that.

"Interest rate differential was an important factor leading the yuan depreciation against the dollar past year as yields between China and the United States shrunk sharply", he said.

"No I wouldn't do that", Trump said when asked if he wanted to devalue the dollar.

"We think Chinese policies will become incrementally easier, but a large new stimulus remains unlikely in the near future", Wang Tao, chief China economist at UBS AG in Hong Kong, wrote in a note.

The exchange rate change is set to face more uncertainty, said Cong Yi, a professor at the Tianjin University of Finance and Economics.



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