Trump's trade war with China is 'the biggest risk to the global economy,' BlackRock exec says

Trump's trade war with China is 'the biggest risk to the global economy,' BlackRock exec says
  • BlackRock Vice Chairman Philipp Hildebrand describes the Federal Reserve’s current pace of credit tightening as “healthy” and “necessary.”
  • “The policies that are embraced by the U.S. administration around trade represent the biggest risk today to the global economy,” he says.

President Donald Trump’s trade policies pose the greatest threat to global economic growth, according to the vice chairman of the world’s largest money manager.

In an interview Tuesday, BlackRock’s Philipp Hildebrand also described the Federal Reserve’s current pace of credit tightening as “healthy” and “necessary.”

The U.S. central bank, which began tightening monetary policy in 2015, has raised rates twice this year and is widely expected to do so again this month and in December.

A number of emerging market countries, including Argentina, Turkey and Brazil, are feeling the impact as the Fed’s monetary policy has boosted the dollar.

When asked whether he believed Trump posed a bigger threat to the global economy than Fed Chairman Jerome Powell, Hildebrand replied: “I would say the policies that are embraced by the U.S. administration around trade represent the biggest risk today to the global economy.”

He added that the “overarching difference” for the Federal Reserve’s current monetary strategy is the impact of the U.S.-China trade war.

'Can I disagree?'

Hildebrand’s comments on CNBC’s “Squawk Box Europe” come as investors continue to monitor the prospect of an escalating global trade war between the U.S. and China. Trump reportedly said over the weekend that he is prepared to impose tariffs on an additional $200 billion worth of imports from China as soon as a public comment period ends Thursday.

Washington and Beijing have already applied charges to $50 billion of each other’s goods in a tit-for-tat trade dispute.

“Can I disagree?” Daniel Lacalle, chief economist at Tressis Gestion, told CNBC on Tuesday. “The biggest threat to the economy is not Jerome Powell and it is definitely not Donald Trump. The biggest threat to the economy is extremely loose monetary policies that have created these enormous bubbles.”

Lacalle argued that major central banks, including the Fed, were guilty of repeatedly misleading emerging market economies with empty promises.

In response, Hildebrand said: “No central banker has ever said policy will never change. In fact, the Fed has been extremely transparent about its tightening path. It has been very consistent.”

“We have a more challenging environment because of tightening, but that is normal,” he added. “We have overarching risks around trade and you have some very exposed countries. That is really the way we should look at this.”

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