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Hopes of an early resolution to the trade war raging between Washington and Beijing have taken a knock, after President Donald Trump declared it was vital to “take China on”, regardless of the short term economic damage.
With fears of a US recession on the rise, Trump claimed that such concerns were “irrelevant”, given the need to challenge the Chinese administration.
He told reporters gathered in the Oval Office that:
“It’s about time, whether it’s good for our country or bad for our country short term…..The fact is somebody had to take China on.”
The tit-for-tat tariffs imposed on hundreds of billions of dollars of imports between the two countries have spooked the financial markets and slowed global growth, economists believe.
They have also caused real pain to groups such as American farmers, through lost sales, and risk pushing up prices for consumers.
Trump. though, insists that it’s all worth it:
“This is something that had to be done. The only difference is I am doing it,” he said.
“China has been ripping this country off for 25 years, for longer than that and it’s about time whether it’s good for our country or bad for our country short term. Long term it’s imperative that somebody does this.”
The president also revealed he is considering a temporary payroll tax cut to help workers, implying the White House is seriously worried that the economy is turning sour ahead of next year’s elections.
But Trump also denied that a recession is looming (while also pointing the blame finger at central bankers at the Federal Reserve):
“We’re very far from a recession…In fact, if the Fed would do its job, I think we’d have a tremendous spurt of growth, a tremendous spurt.”
Trump’s comments were overshadowed by his remarkable decision to scrap his visit to Denmark, because prime minister Mette Frederiksen rebuffed his proposal to buy Greenland.
But, such pugnacious comments about China suggest the trade dispute could rumble on for months. Unless there’s a breakthrough, the US will impose fresh tariffs on September and December, doubtless triggering a retaliation.
Also coming up today
The latest UK public finances will show whether Britain is on track to hit its fiscal targets this year — although a no-deal Brexit would blow them out of the water.
Germany will attempt to sell a new 30-year bond that doesn’t offer buyers any interest payments, in a test of the strength of the bond market rally.
And after the European markets close, the US Fed will publish the minutes of its July meeting where it voted to cut interest rates.
- 9.30am BST: UK public finances for July (expected to show a surplus of £2.7bn)
- 10.30am BST: Germany auctions 30-year bund with a zero coupon
- 3pm BST: US home sales for July
- 7pm BST: Minutes of the last Federal Reserve meeting