Trump Surprise Tweet Restores Steel and Aluminum Tariffs
This morning, Trump accused Argentina and Brazil of massive currency devaluation, saying such moves hurt U.S. farmers.
Economists disputed the notion that Brazil’s government is manipulating its currency. The Brazilian real did lose value against the dollar over the past few years, but it was due mainly to market forces, they said.
“Brazil has had a free-floating currency for a long time now, and that isn’t changing,” said economist Carlos Kawal, chief researcher at ASA Bank in São Paulo. “The real is weakening because interest rates are going down and the dollar is strengthening against emerging-market currencies.”
If anything, Brazil’s central bank is trying to beef up, not weaken, the real. As the currency’s decline gained speed last month, the bank sold more than $3 billion of Brazil’s large dollar reserves to put a floor under the real.
Trump an Economic Illiterate
Selling reserves to boost a currency is the wrong thing to do, but it makes a mockery of Trump's claim.
Tariffs will raise the price of steel hurting US car manufacturers still reeling over the GM strike and the trade war with China.
Trump is an economic illiterate and terrible negotiator as well.
How can anyone be in doubt?
One of my readers accurately commented: "The notion that Argentina has displayed enough economic competence to manipulate its currency in any direction successfully is an odd one."
Mike "Mish" Shedlock