Trump says Fed could help "win" trade war with China

Copyright of the image
Getty Images

US President Donald Trump has hinted that the Federal Reserve could support the United States in its commercial battle against China.

The trade dispute between the world's two largest economies has worsened this week with tariff increases on both sides.

In an article on Twitter, Trump said China would act to stimulate its economy to cope with the fallout.

If the Fed were to "match" China's stimulus potential, it would be "a finite game," he said.

"China will inject money into its system and will probably reduce interest rates, as always, in order to make up for the market that they lose and lose," Trump wrote on Twitter.

"If the Federal Reserve made a" match ", it would be an end game, we would win! Whatever it is, China wants an agreement!"

US presidents have always avoided publicly commenting on the Fed's policy for fear of politicizing the institution and undermining confidence in its decisions.

Mr Trump has attacked the Fed and its president, Jerome Powell, several times over the past year, forcing them to keep interest rates low.

The US central bank "normalized" its monetary policy after years of keeping rates at extremely low levels following the 2008 financial crisis.

At the same time, China sought to support its economy as it struggled against the slowdown in the economy and the trade war.

An agreement "when the time has come"

The United States and China have been waging a trade war since last year, imposing tariffs of several billion dollars on their products.

Only recently did the two countries seem close to an agreement, but last week US officials said the Chinese had reneged on some of their promises.

The United States raised tariffs on Chinese goods worth $ 200 billion (£ 154.9 billion) on Friday, and China responded with tariff increases on US goods this week.

Trump said on Twitter that the United States would reach an agreement with China "when the time comes".

"My respect and friendship with President Xi is unlimited, but, as I have told him many times, it must be a good deal for the United States or it makes no sense," said M Trump.

He added: "All this will happen, and much faster than people think!"