Image for representation. Photograph:( Reuters )
Trump said US and Chinese negotiators were 'close' to a 'phase one' trade deal, but largely repeated well-worn rhetoric about China's 'cheating' on trade.
President Donald Trump on Tuesday dangled the prospect of completing an initial trade deal with China "soon," but offered no new details on negotiations in a campaign-style speech touting his administration's economic record.
Markets had been on edge about Trump's highly anticipated remarks to The Economic Club of New York, but barely moved after the speech, which contained no major policy announcements. Rumours early on Tuesday that Trump might announce a venue and date for signing a trade deal with Chinese President Xi Jinping proved unfounded.
Trump said US and Chinese negotiators were "close" to a "phase one" trade deal, but largely repeated well-worn rhetoric about China's "cheating" on trade.
"They are dying to make a deal. We're the ones that are deciding whether or not we want to make a deal," Trump said, echoing remarks he made on Saturday.
"We're close," he said. "A significant phase one trade deal with China could happen. Could happen soon. But we will only accept a deal if it's good for the United States and our workers and our great companies."
Trump said he would raise tariffs on Chinese goods "very substantially" if China does not make a deal with the United States. "And that's going to be true for other countries that mistreat us too," he added.
White House economic adviser Larry Kudlow later told CNBC that the phase one agreement could include some adjustments to tariffs already in place, but neither side would agree to such steps "until the entire deal is put together."
US stocks largely drifted sideways as Trump spoke, holding onto modest gains. The S&P 500 was up about 0.3 per cent in afternoon trade, close to a record high. The response in bond and foreign exchange markets was equally subdued.
"The only thing that's maybe new is that he did not announce a date and a time for a signing ceremony," Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York, said of the speech. "Where markets had been hoping for that, those hopes were dashed," he added, saying that buying of riskier assets faded when it became apparent that no major announcement would be made.
Trump once again took aim at the Federal Reserve's monetary policy decisions that have left US interest rates higher than many other economies and said he would prefer negative rates.
The Fed has cut interest rates three times since July, following a string of nine increases since late 2015. Trump has repeatedly railed against the Fed for not lowering rates even more.
"Remember we are actively competing with nations that openly cut interest rates so that many are now actually getting paid when they pay off their loan, known as negative interest. Who ever heard of such a thing?" Trump said in his remarks.
"Give me some of that. Give me some of that money. I want some of that money. Our Federal Reserve doesn't let us do it," he said.
But Kudlow told CNBC that he did not believe negative rates were needed given the strong US economic performance. "I don’t think the United states needs negatives rates ... because our economy is in very good shape," Kudlow said.
Trump touted tax cuts passed by Republicans in 2017, saying they have created an unprecedented economic boom, and said there was room for further reductions in rates too. He alluded to a Republican "tax cut 2.0" plan that has been stalled by Democrats in the House of Representatives.
As he often has, Trump pointed to the stock market's run-up as a validation of his economic and trade policies.
The S&P is up more than 36 per cent since Trump took office, though two-thirds of that gain occurred in his first year in office before he began imposing tariffs on imports from China. Stocks have found the going far more choppy since the first wave of tariffs were imposed in 2018, though all three major indexes hit record highs last week.
The latest back-and-forth between Washington and Beijing illustrates the bumpy state of play. Last week, officials from both sides said they had a deal to roll back tariffs, only to have Trump deny any deal had been agreed on.
Tuesday was Trump's second appearance at the storied Economic Club of New York, which has hosted US presidents including Woodrow Wilson and John F. Kennedy, as well as foreign leaders like former Soviet President Mikhail Gorbachev and Chinese Premier Li Keqiang.Trump previously addressed the organization in 2016 when running for president.