President Trump on Tuesday blamed the Federal Reserve for a recent slowdown in manufacturing, a key sector he promised to revive as a candidate.
“The Federal Reserve loves watching our manufacturers struggle with their exports to the benefit of other parts of the world,” he tweeted. “Our Fed has been calling it wrong for too long!”
The manufacturing sector’s output has shrunk for two consecutive quarters, meeting the widely accepted definition of a recession. It has been among the hardest-hit sectors from Trump’s escalating trade war with China.
{mosads}The decline could complicate Trump’s reelection bid. Manufacturing plays an outsize roll in key states such as Pennsylvania, Wisconsin and Michigan, which helped hand Trump the White House when they flipped in the 2016 election.
Last week, Trump said he would increase tariffs on Chinese imports from 25 percent to 30 percent, and raise the rates on new tariffs scheduled to go into effect in September and December from 10 percent to 15 percent.
The move followed China’s announcement that it would retaliate with its own tariffs on $75 billion of American goods, such as cars and agriculture.
Trump has since said that he thinks the chances of inking a trade deal with China are good, though Chinese officials denied his claim that high-level phone calls took place over the weekend on the issue.
Trump has frequently targeted the Federal Reserve, the independent body responsible for setting monetary policy and interest rates, as the cause of the country’s economic woes. He has speculated about removing his hand-picked Federal Reserve chairman, Jerome Powell — a move critics say would violate the central bank’s independence, long considered a key tenet of a functional financial system.
In a speech last week, Powell said the Fed would act as necessary to combat a weakening economy and pointedly noted the trade war was a detrimental shock on the economy.
“The global growth outlook has been deteriorating since the middle of last year. Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States,” he said.
“While monetary policy is a powerful tool that works to support consumer spending, business investment and public confidence, it cannot provide a settled rulebook for international trade,” he added.
Trump called Powell an “enemy,” on Twitter, comparing him to Chinese President Xi Jinping.
Economic growth has slowed in recent months and is expected to stall below 2 percent in the last two quarters of the year, well below the sustained 3 percent level the Trump administration has promised.
A recent survey of economists found that roughly a third expect the economy to tip into recession in the coming year.