Trade and the upcoming meeting between President Trump and China’s Xi Jinping are leading the market this morning, with stocks falling and the dollar gaining.

Trump ready to increase Chinese tariffs

In what is likely a negotiation tactic ahead of an in-person meeting, President Trump said the U.S. is ready to increase a 10% tariff on $200 billion in Chinese goods to 25%.

The comments, published Monday by the Wall Street Journal, sparked a risk off mood in the markets and more speculation about whether or not any progress could be made when Trump and Xi meet at the G20 Summit.

Trump also said he is ready to impose tariffs – 10% or 25% – on an additional $267 billion in Chinese goods.

The EUR/USD pair dipped lower to 1.131 Tuesday morning before recovering slightly to 1.132.

Another Brexit blow for May

As if U.K. Prime Minister Theresa May didn’t have enough of an uphill battle ahead of her to pass her Brexit deal through parliament, she now has to dispel comments by President Trump.

Speaking to reporters Monday, Trump said that the way the current Brexit deal with the E.U. stands, the U.K. would be unable to trade with the U.S.

Under the terms of the agreement, the U.K. could very well trade with many other countries, including the U.S. However, the U.K. striking a new trade deal with the U.S. might be a tough challenge either way, given the current hardline trade policy of the Trump administration.

The GBP/USD pair fell from 1.285 to 1.281 after the comments Monday. The pair is trading even lower Tuesday around 1.277 as more reports of how hard the deal will be to pass in parliament surface. A vote is set for Dec. 11.

Fed speak

Federal Reserve Vice Chairman Richard Clarida spoke in New York this morning, saying interest rates are much closer to neutral than when the Fed began hiking rates in December 2015.

Clarida, the Fed’s newest member, pointed to data as the determinate on how the Fed can continually reevaluate the neutral rate – or one that does not stimulate or restrict the economy.

Clarida’s speech comes a day before Chairman Jerome Powell speaks to the New York Economic Club.