Trump administration says no USA trading partners manipulate currency

Cornelia Mascio
Aprile 20, 2017

Trump has informed that some of U.S.'s trading partners, mainly China, manipulated their currency but has since backed off that claim, and acknowledged China has not weakened the Yuan to make exports cheaper.

In other words, before completion of the first term China will be on the hook of Trump. China and Germany are not manipulating the value of their currencies to gain an unfair trade advantage, but both should do more to reduce their large trade surpluses with the United States, the Treasury Department said yesterday.

No major trading partner of the United States was named a currency manipulator in a latest Treasury report on the foreign exchange policies of these countries, though a list including six countries whose polices were deemed to require close monitoring was left unchanged.

Trump declared on Wednesday that he would back away from a campaign promise to name China a currency manipulator, a move that would have created friction between the world's largest economies as they try to boost trade cooperation and address North Korea's nuclear threat.

Since the central bank was reluctant to intervene in recent sessions, the Taiwan dollar appreciated more than 6 percent against the greenback in the first quarter of this year, which sparked an outcry from exports-oriented firms, particularly those in the high-tech sector which had incurred large foreign exchange losses in the three-month period.

"An essential component of this administration's strategy is to ensure that American workers and companies face a level playing field when competing internationally", Treasury Secretary Steven Mnuchin said in a statement. Declaring a country a manipulator would set off a process including negotiations that could culminate in punitive trade sanctions on the offender. The designation means there will be intense talks between the United States and the labeled country and can lead to tariffs imposed by the US.

The Treasury report's language on Japan was similar to past reports, and focused on the need for structural reforms to improve domestic demand, analysts said.

No countries were determined to have met all three of these criteria, but Japan, South Korea, Taiwan, Germany and Switzerland all met two of them. Its surplus with the United States totaled $65 billion previous year.

"When our trading partners engage in currency manipulation, they impose significant, and often long-lasting hardship on American workers and businesses", he said.

The report also criticized Japan for failing to do more to stimulate domestic demand and thereby increase sales of US and other foreign goods. The administration has also put forward a draft proposal on renegotiating the North American Free Trade Agreement with Mexico and Canada that dropped some of the tougher positions Trump took during the campaign.

"The US can not and will not bear the burden of an worldwide trading system that unfairly disadvantages our exports and unfairly advantages the exports of our trading partners through artificially distorted exchange rates", it said.

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