President Donald Trump on Thursday took a step closer to sparking a currency war in the escalating conflict with China, saying he is not happy with the strong US dollar.

Trump has pursued a policy of maximum pressure, including subjecting all Chinese goods to punitive tariffs as of September 1, and accusing Beijing of manipulating its currency to gain a competitive edge.

"As your President, one would think that I would be thrilled with our very strong dollar. I am not!" he said on Twitter.

The latest outburst comes days after the US Treasury labeled Beijing a currency manipulator for allowing the yuan to depreciate slightly in the face of new US tariffs.

"Labeling China as a manipulator is totally fallacious. They are not manipulating," said C. Fred Bergsten, founder of the Peterson Institute of International Economics.

But while he said the move stops short of a full-blown currency war, the risks are real.

"Getting into a currency war would be very risky business. Particularly with this administration, which nobody trusts anyway," Bergsten said.

William Reinsch, a trade expert and former congressional advisor, warned of the risks of weaponizing currencies, something done in the early 1930s, that exacerbated the Depression.

For decades, US administrations of both parties have steadfastly advocated keeping the dollar strong since that provides stability and can hold down inflation by making imported goods less expensive.

Reinsch, of the Center for Strategic and International Studies, said Trump has painted himself into a corner and his hardline tactics with China make a deal less likely.

Trump also has been relentlessly pressuring the Fed, demanding it cut interest rates in almost daily tweets.

US central bankers "have called it wrong at every step of the way," Trump said.

And Trump's own trade war adds to uncertainty that has caused businesses to hold off on investment, and for investors to seek safe havens, including buying US dollars, they say.

"Any effort to weaken the dollar through intervention or anything else would be really leaning against a very strong wind and I don't think there is much prospect for their finding a way to do it."

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