Trump trade war with China is 'BIGGEST RISK' to global economy, warns banking chief
BlackRock’s Philipp Hildebrand said Mr Trump’s trade policies pose the greatest threat to economic growth, adding the Federal Reserve’s stance of tightening its purse strings is both “healthy” and “necessary”.
Asked if Mr Trump was a bigger threat to the global economy than the central bank’s chairman Jerome Powell, Mr Hildebrand told CNBC: “I would say the policies that are embraced by the US administration around trade represent the biggest risk today to the global economy.”
The US central bank began credit tightening in 2015 and twice this year has raised interest rates, with a third and fourth hike expected to take place this month and later on in December.
This has boosted the value of the dollar but had triggered a devastating impact on emerging markets in other countries such as Turkey and Argentina.
Mr Hildebrand said the “overarching differences” for the Federal Reserve’s current monetary strategy is the impact of Mr Trump’s trade war with China.
The spat, between Mr Trump and China’s President Jinping Xi has been steadily escalating over the summer, with the US President recently threatening to impose tariffs on an additional $200billion worth of Chinese imports.
This follows his $50billion levy on goods from China, who responded by imposing the same fees on American-made products in a tit-for-tat row over trade.
Yesterday Chinese demand for oil slumped after the US imposed crippling sanctions on Iran, one of the world’s biggest oil importers, triggering fears the Middle East will become destabilised.
This would also see the price of oil rise as Iran’s ability to contribute to the world’s supply is restricted by US sanctions. This has been attributed to China’s diminishing interest in oil.
Oman’s Oil Minister, Mohammed bin Hamad Al Rumhy, told CNBC: “The Middle East unfortunately is not in a stable position right now, and we are concerned that we are seen as a high risk region, and that effects our business.”
Speaking at the World Heavy Oil Congress, he said: “If there is a serious trade disagreement between the US and China, the Chinese consumption of energy will be impacted negatively, from our point of view and the ability to produce and export will be impacted.
“And I think, and many people agree with me, that the demand will be impacted — so that's not good for us.”
China became the world’s largest crude oil importer in 2017, surpassing the US and importing 8.4 million barrels per day.
President Trump is also embroiled in a bitter trade spat with the EU.
He agreed in July to hold back on his proposed 25 percent tariffs on cars to allow the EU to develop ways to cut down trade barriers, but became frustrated with the lack of progress from Brussels and intensified his trade rhetoric this week.