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US 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 Mr 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 Mr Trump might announce a venue and date for signing a trade deal with Chinese president Xi Jinping proved unfounded.
The president 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.
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“They are dying to make a deal. We’re the ones that are deciding whether or not we want to make a deal,” Mr Trump said of China. “We’re close. 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.”
Raise tariffs
He 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.
US stocks largely drifted sideways as Mr Trump spoke, holding onto a modest gain on the day. 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.
“I don’t think we’ve learned anything new from Trump’s speech,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.
Give me some of that money. I want some of that money. Our Federal Reserve doesn't let us do it
"The only thing that's maybe new is that he did not announce a date and a time for a signing ceremony. Where markets had been hoping for that, those hopes were dashed," Mr Anderson said, adding that buying of riskier assets faded when it became apparent that no major announcement would be made.
Monetary policy
The president 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.
“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?” he told his audience.
"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."
When Mr Trump got only a smattering of applause for those comments, he said: “Thank you, thank you – only the smart people are clapping.”
The Fed has cut interest rates three times since July, but that followed a string of nine increases since late 2015. Mr Trump has repeatedly railed against the Fed for not lowering rates even further.
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, alluding to a Republican “tax cut 2.0” plan that has been stalled by Democrats in the House of Representatives.
“We have delivered on our promises and exceeded our expectations by a very wide margin,” Mr Trump told guests at the New York Hilton. – Reuters
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