2020 Elections

Kamala Harris argues Trump's 'trade tax' pushed the Fed to cut interest rates

Key Points
  • Sen. Kamala Harris says President Trump's trade war with China is a "tax" and forced the Fed to cut interest rates.
  • While the Fed's policy committee did not cite trade as its main motivating for cutting its benchmark interest rate, Fed Chairman Jerome Powell acknowledged that trade is affecting the economy.
Sen. Kamala Harris, D-Calif., participates in the second of two Democratic presidential primary debates hosted by CNN Wednesday, July 31, 2019, in the Fox Theatre in Detroit.
Paul Sancya | AP

DETROIT – Sen. Kamala Harris contended Wednesday that President Donald Trump's trade policy forced the Federal Reserve to cut interest rates.

It was one of the rare moments where trade policy came up during the two nights of debates in Detroit. Harris argued that Trump failed to follow through on "promises to working people." Harris criticized the president for the trade conflict with China that she said put a financial burden on American consumers.

"[Fed Chairman] Jerome Powell just dropped the interest rates and he admitted why, because of the so-called trade policy this president has that has been nothing more than the Trump trade tax that has resulted in American families spending as much as $1.4 billion more a month on everything from shampoo to washing machines. He betrayed the American people," Harris said.

Earlier Wednesday, the Federal Reserve cut its benchmark interest rate target for the first time since 2008. The central bank's policy-setting committee cited "implications of global developments for the economic outlook as well as muted inflation pressures."

In comments after the Fed's two-day meeting ended, Powell suggested that trade tensions influenced the decision on rates.

"We also feel like weak global growth and trade tensions are having an effect on the U.S. economy. You see it now in the second quarter you see weak investment, you see weak manufacturing," Powell told reporters.

Several other candidates detailed how they would change trade policy when asked nearly two hours into Wednesday's debate. Former Vice President Joe Biden shifted his stance on the Trans-Pacific Partnership, a deal he backed as a member of the Obama administration that Trump backed out of in one of his first major acts as president.

"I would not rejoin the TPP as it was initially put forward," Biden said. "I would insist that we renegotiate pieces of that with the Pacific nations that we had in South America and North America so that we could bring them together to hold China accountable for us setting the rules of the road."

Rep. Tulsi Gabbard of Hawaii criticized TPP. Still, she said she would not continue Trump's tariffs on China.

"I would not because the approach that President Trump has taken has been extremely volatile without any clear strategic plan and it has a ravaging and devastating effect on our domestic manufacturers, on our farmers who are already struggling and are failing to see the light of day because of the plan that Trump has taken," she said.

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