Trump defends about-face on labeling China a currency manipulator
Apr 18 2017 by Harriet Stone
Asian countries escaped the currency manipulator label in the latest U.S. Treasury report, but remain wary of possible trade friction as President Donald Trump maintains his administration will seek to address trade imbalances.
In addition to Taiwan, the U.S. Treasury has also placed China, Japan, South Korea, Germany and Switzerland on the list.
PALM BEACH, Florida- President Donald Trump wrapped up his Easter weekend in Florida Sunday, sharing several messages on Twitter.
In its report to Congress, the Treasury Department noted that Beijing had intervened in currency markets for about a decade to depress the value of its currency, the renminbi. However, it hurts U.S. exports and makes foreign goods more competitive in United States markets.
That would be above the target of around 6.5 per cent Beijing has set for this year's growth, but many analysts expect momentum to fade slowly in coming months.
Treasury Secretary Steven Mnuchin pledged to continue to monitor currency practices closely, saying that an essential component of the Trump administration's strategy is to ensure that American workers and companies face a level playing field when competing internationally.
Trump has said some USA trading partners, particularly China, manipulated their currency, but has since backed off that claim and acknowledged that China had not weakened the yuan to make its exports cheaper.
The 100-day trade talks announced after a Sino-American presidential summit last week will aim to deal with decades of thorny trade issues, leaving some USA business leaders wary that the short timeline might yield superficial results. That, however, would contravene World Trade Organization rules.
For Freund, who had previously worked at the World Bank, the International Monetary Fund and the Federal Reserve Board, the trade deficit has more to do with USA domestic fiscal policy rather than trade policy with other countries.
The report also accused China of restricting market access and investment, and called China's goods trade surplus with the U.S., at $347 billion in 2016, as by far the largest among any of the United States major trading partners.
China only meets the criterion of having a major trade surplus. Its surplus with the United States totaled $65 billion previous year.
Barring a major shock in the China readings, markets are expected to remain focused on USA data and its possible impact on the pace of interest rate hikes, and concerns over North Korea and the French presidential election.
However, the U.S. Treasury did not name Taiwan as a currency manipulation nation in the report.
"While they're not manipulating their currency at the moment because it doesn't suit their economic needs, make no mistake about it".
In the lead-up to President Xi Jinping's arrival, Trump said the meetings would be "very difficult" because "we can no longer have massive trade deficits and job losses".
Trump did say he thought the dollar was "getting too strong" - a comment that sent the USA currency falling, though it subsequently rebounded.
USS Ross, an Arleigh Burke-class guided-missile destroyer, fires a Tomahawk land attack missile during the naval operations of the USA 6th Fleet area of operations in the Mediterranean sea near Rota, Spain, April 7.
Shares and the USA dollar dipped on Monday while US bond yields slumped to five-month lows after soft US economic data hurt investor sentiment already frayed by worries over North Korea and coming French elections.