(Bloomberg) — President Donald Trump’s trade adviser took up the cudgel against the Federal Reserve and its leader Jerome Powell, saying the Fed is the single greatest obstacle to strong growth in the U.S.
Peter Navarro commented on “Fox News Sunday,” days after Trump announced that 10% tariffs may be put on $300 billion of US. imports from China. Consumer goods, including smartphones, laptops, sneakers and toys, would be targeted if the duties go into effect Sept. 1.
Fed Chairman Powell cited trade tensions with China more than two dozen times on Wednesday as a key reason for the central bank’s 25-basis-point interest rate cut. The central bank had been widely expected to lower rates as a buffer for the economy against the negative impact of Trump’s trade war.
“I find it ironic that Jay Powell of the Fed would come on and blame trade tensions,” Navarro said. “In fact, Jay Powell is singularly responsible for losing at least a point of growth on our GDP by raising interest rates by 100 basis points and engaging in what’s called quantitative tightening.”
Navarro’s comments echo those of his boss, who’s spent a year criticizing the Fed and Powell.
All the Trump Quotes on Powell as Fed Remains in the Firing Line
U.S. stocks suffered the worst week of 2019 as investors fretted over Trump’s escalation of his trade war with China. Markets tumbled in Asia and Europe as well.
China has vowed to retaliate against what it called “blackmailing” if Trump follows through on the tariffs next month. The tensions come shortly after a truce that had been in place since Trump met Xi Jinping, his Chinese counterpart, in Osaka at the end of June.
Trump said Xi hadn’t lived up to a promise in Osaka to purchase large quantities of U.S. agricultural goods and to halt illegal exports of fentanyl. He also threatened Friday to increase the tariffs “substantially” if China doesn’t “turn it around.”
The president tweeted on Saturday that things are going along “very well with China” and that the U.S. “consumer is paying nothing” for the tariffs, repeating a widely challenged assertion that China, not American importers and consumers, bear the cost.
Gaming the System
Navarro was asked about a study from the Tax Foundation, a Washington think-tank, that showed the average cost to a U.S. family of four from the pending tariffs would be $350 a year, on top of an estimated $850 a year from the levies already in place. He said it was “false” that U.S. consumers are bearing the cost.
“China has strategically gamed the tariffs by slashing their prices and by devaluing their currency,” he said. “Consumers are not seeing any price hikes in any significant way, and it’s not showing up in the data.”
Nevertheless, it’s important for trade negotiations to continue, Navarro said. U.S. and Chinese negotiators are supposed to regroup in Washington in early September.
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