Trump says US is ‘not ready’ to sign trade agreement with China

President Donald Trump said on Friday he was not ready to finalise a trade deal with Beijing and signaled he might cancel talks set for September, raising the stakes in the intensifying US-China trade war.

“We’ll see whether or not we keep our meeting in September,” Trump told reporters at the White House before heading out on vacation at his New Jersey golf resort.

Relations have soured further in the past week after Trump announced a new round of punitive tariffs on Chinese goods, despite a truce agreed with President Xi Jinping, and Beijing responded by halting all purchases of US agricultural goods.

The US Treasury then declared China a currency manipulator, after the yuan lost value in the face of the new round of tariffs due to take effect September 1.

“We’re not ready to make a deal but we’ll see what happens,” Trump said. “We have all the cards. We’re doing well.” US and Chinese negotiators met in Shanghai in late July for the first time since talks collapsed in May, and were due to hold another round in September.

“Whether or not they’re canceled, we’ll see,” Trump said.

The countries have imposed tariffs on $360 billion in two-way trade and with the new round Trump announced, all Chinese goods would be subject to punishing duties.

Trump on Thursday lamented the strength of the US dollar which puts American manufacturers at a disadvantage, and once again demanded the Federal Reserve lower interest rates to counteract that.

His latest comments continued the relentless campaign against the US central bank, but backed away from calls for a weaker exchange rate for the dollar.

“No I wouldn’t do that,” Trump said when asked if he wanted to devalue the dollar.

However, “If the Federal Reserve would bring down interest rates over a period of time, I would love to see a point or a little more than that.” The Fed raised the benchmark US interest rate four times last year, a total of a full percentage point, but pulled back with a rate cut last week.

Trump called on the Federal Reserve to lower interest rates by a full percentage point, saying the nation’s economy was being “handcuffed” by the US central bank’s monetary policy.

Trump, speaking to reporters at the White House, said a strong US dollar was hurting American manufacturers and that the Fed needed to lower rates further despite its cutting rates last month for the first time since 2008.

A full percentage point cut would be even more aggressive than the three 0.75 percentage-point reduction bond investors currently expect the Fed to make in small steps between now and January.

The Republican president did not give any other details about how he would want the Fed to proceed on carrying out such a drastic reduction.

Delivered all at once, a full percentage point would be dramatic - the sort of step associated with a severe economic shock, as opposed to the quarter-point increments that the Fed tends to rely on to fine-tune its target interest rate.

On July 31, the Fed cut its target interest rate by 25 basis points to 2.00-2.25%, citing implications of global developments for the US economic outlook and muted inflation pressures.

Meanwhile, Wall Street’s main indexes added to losses on Friday after President Donald Trump said he was not going to make a deal with China for now, exacerbating fears that the US-China trade stand-off would aggravate the global economic slowdown.

Trump’s remark followed a report that said Washington was delaying a decision to allow some trade between US firms and China’s telecom equipment maker Huawei again.

That pressured the shares of chipmakers and other tariff-sensitive technology companies. The Philadelphia SE Semiconductor index fell 1.8% and Apple Inc slipped 1.1%.

Political uncertainty in Italy, euro zone’s third-largest economy, and a surprise contraction in Britain’s economy as it gears up to leave the European Union in October added to market worries.

More investors sought the safety of US government bonds, which pushed the U.S. Treasury yields lower.

Friday’s losses in US stocks come a day after they rose to record their best one-day percentage gain in two months in a turbulent week dominated by a symbolic drop in China’s currency.

At 10:59am, the Dow Jones Industrial Average was down 161.38 points, or 0.61%, at 26,216.81, the S&P 500 was down 20.83 points, or 0.71%, at 2,917.26. The Nasdaq Composite was down 75.14 points, or 0.93%, at 7,964.02.

Ten of the 11 major S&P sectors were lower, with technology sector, which bore the brunt of this week’s selloff, slipping the most.

With investors turning wary of risk, defensive sectors, including utilities and real estate, outperformed this week.

Among stocks, Uber Technologies Inc shed 6.9% after the ride-hailing company reported a record $5.2 billion loss and revenue that fell short of Wall Street targets.

Agencies