Trump administration report labels no US trading partners as currency manipulators

Mandy Carr
April 18, 2017

President Donald Trump was back on Twitter bright and early Easter morning, denying he called out China for manipulating their currency despite the fact that he made that exact charge in late February.

And although the administration's first report to Congress on the foreign exchange policies of U.S. trading partners continues the stance of the Obama administration, putting six countries with troublesome policies on a watch list, it takes a much tougher tone.

While China does engage in unfair trade practices, such as protectionism and the financing of companies with state funds, currency manipulation appears to be less of a problem now.

The semi-annual U.S. Treasury currency report released on Friday did not name any major trading partner as a currency manipulator, although it seemed to leave open the option for action in the future.

Over the last decade, China's effective exchange rate has appreciated more than any other major currency, rising a total of more than 40 percent, said David Dollar, a senior fellow at the Brookings Institution.

"Treasury will be scrutinizing China's trade and currency practices very closely, especially in light of the extremely sizable bilateral trade surplus that China has with the United States", it added.

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Like the last report by the Obama administration last October, China met only one of the three criteria-for having a large trade deficit-that's used by the Treasury as a threshold for manipulation.

The report came after China data showed its surplus with the United States was almost unchanged in the first quarter compared to a year earlier at $49.6 billion, and cited China's market protection as an impediment to a balanced trade relationship.

Japan, South Korea, Taiwan (Taiwan OTC: 6549.TWO - news) and Switzerland also were again included on the monitoring list.

"The United States 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", the report stated. The report is the government's formal channel to impose the manipulator designation, leading to a year of negotiations for a solution and penalties if the practice continues.

The Treasury left the criteria for manipulation unchanged at having a trade surplus with the USA above $20 billion; having a current-account surplus amounting to more than 3 percent of gross domestic product; repeated currency depreciating by buying foreign assets equivalent to 2 percent of output over the year.

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Other reports by Guamnewswatch

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