President Donald Trump said talks with China planned for next month could be called off after the trade war between the world’s biggest economies abruptly escalated in recent days.
“We’ll see whether or not we keep our meeting in September,” Trump said as he left the White House Friday for a fundraiser in the Hamptons. “If we do, that’s fine. If we don’t, that’s fine.”
The president also tamped down speculation that the U.S. would intervene in currency markets to devalue the dollar. When asked whether he’d take such action, he replied: “No, we don’t have to.” Yet he added lower interest rates from the Federal Reserve — a move the president is pressing for — would have the same effect.
U.S. stocks fell as markets reacted to a possible pickup in trade tensions. The Bloomberg dollar index, which measures the U.S. currency against a basket of peers, briefly jumped following Trump’s comment on the greenback, before sliding to trade 0.1% lower.
Inside the White House, hawks have been pushing for a direct Treasury intervention in currency markets by pointing to a slowdown in U.S. manufacturing, which many economists have blamed on tariffs imposed by Trump and uncertainty surrounding his trade war with China.
Trump’s comments signaled there’s no end in sight to the trade feud between the two largest economies. Trump last week said new tariffs on Chinese imports will take effect Sept. 1, shattering a truce reached with President Xi Jinping weeks earlier and unleashing tit-for-tat actions on trade and currency policy that risk accelerating a wider geopolitical fight between the two countries.
Trade negotiators are currently scheduled to meet again in Washington in September. Recent escalations have raised the possibility that negotiations could break down once again. “I’m not ready to make a deal” with China, Trump added, acknowledging the talks set for September. “Whether or not they’re canceled, we’ll see.”
Trump also accused China of misrepresenting the strength of its economy — something suspected by many analysts — saying their latest reported quarterly growth of 6.2% is “phony.” Asked what he thought China’s true growth rate was, he replied: “Maybe neutral.”
But Trump said the two countries still have “an open dialogue,” adding that the tariffs have been amazing. “We’re doing very well with China,” Trump said Friday. “We’re talking to China. We’re not ready to make a deal but we’ll see what happens.”
Speculation has been building among strategists that U.S. may intervene to forcibly weaken the dollar. The risk of U.S. action rose further in the eyes of some analysts this week after the yuan plunged to a decade-low and the Trump administration formally named China a currency manipulator.
“We have the safest currency of the world, we have the standard of the world,” Trump said in his remarks.