Trump’s big bet on the Fed

President Trump has insisted that his tariffs on Chinese imports are hurting only China. But he may be gambling that the Fed can ward off the prospect of a U.S. recession, Jim Tankersley, Jeanna Smialek and Ana Swanson of the NYT write.

• “Economists say the tariffs are causing damage unacknowledged by the administration,” they write.

• The outlook is gloomy around the world, with slowing growth in China and an economic downturn in Germany. Central banks in many countries are cutting rates as recession concerns mount, and the European Central Bank is reportedly planning big stimulus measures next month.

• Some forecasters warn that the U.S. could also face a recession. The bond market is flashing warning signs, and economic data yesterday revealed a decline in industrial production in July and a shrinking in the manufacturing sector over the past year.

“The president seems to be playing a dangerous game,” by stirring “stuff up just enough to get the Fed to cut interest rates,” Phil Levy, the chief economist at Flexport, a freight company, told the NYT.

• Some of Mr. Trump’s advisers have reportedly suggested that the delay this week of further tariffs on China could help keep inflation in check, which might make the Fed more likely to cut interest rates — something he has often sought.

• But it “may actually have taken pressure off the Fed to act by increasing the chances that China and the United States will reach some sort of a deal” on trade.