“We are winning, big time, against China,” Trump wrote on Twitter, despite few signs of progress in negotiating a new trade agreement with Beijing. “Prices to us have not gone up, and in some cases, have come down.”
The president’s remarks, which he made during his August break in Bedminster, N.J., came as markets plunged for the second time this week. The Dow Jones Industrial Average lost 800 points, or 3.05%, in midday trading Wednesday. The numbers represented the worst percentage drop for the Dow of the year.
Trump has staked much of his re-election campaign on the strength of the U.S. economy, and has frequently bragged about rises in the stock market since his election. Analysts say increasing fears of a global slowdown likely contributed to Wednesday’s downturn.
“The tweets make the president look rattled,” said James Pethokoukis, a policy analyst at the conservative American Enterprise Institute. “It’s clear the most positive thing the president can do is suggest he’s ready to wind down the trade wars.”
A day earlier, Trump announced he would delay until Dec. 15 tariffs on Chinese goods that were supposed to go into effect in September. Trump said he made the move to prevent his tit-for-tat tariff war from having an impact on the holiday shopping period in the U.S., a tacit recognition that the trade battle could affect U.S. consumers.
Gordon Gray, director of fiscal policy at the center-right American Action Forum, speculated that Trump “is anxious to deflect any blame on this front” and that Powell is a convenient target.
“There is no coherence to the president’s approach to tariffs – on the one hand Americans aren’t paying them, yet on the other, they should be spared from the harm at Christmas,” Gray said. “Honestly, if the administration could just pick one analytical framework and stick to it, no matter how flawed, that would at least improve how market actors perceive the administration’s trade actions.”
Administration officials took to cable news and Twitter throughout the day Wednesday to defend the administration’s stance on China, which has won some bipartisan support on Capitol Hill. Even some critics of the president’s trade policies have complained about China’s trade barriers, particularly in the technology sector.
Trump “pays attention to growing this economy by building things… China should pay attention to that,” White House director of trade policy Peter Navarro told Fox Business on Wednesday. “The president grows this economy, that’s what he focuses on.”
Instead of blaming China, Trump turned to a familiar target: The Federal Reserve. The president has complained the Fed has not lowered interest rates quickly enough.
“China is not our problem, though Hong Kong is not helping,” Trump said. “Our problem is with the Fed.” Trump specifically criticized Jay Powell, describing the Fed’s chairman as “clueless.” Trump has repeatedly blasted Powell, whom he named to the job in 2018.
The Fed, an independent board whose members are appointed by the president, raises interest rates to cool down a hot economy and cuts them to stimulate a sluggish one. The rates affect how much it costs to use a credit card, sign a car loan or buy a home.
Analysts said the main factors driving the markets Wednesday were reports that Germany, Europe’s largest economy, contracted 0.1% in the second quarter of the year in part because of global trade disputes and trouble with the auto industry.