US President Donald Trump on Thursday declared China the “grand champions” of currency manipulation, just hours after his new Treasury secretary pledged a more methodical approach to analyzing Beijing’s foreign exchange practices.
In an exclusive interview, Trump said he has not “held back” in his assessment that China manipulates its yuan currency, despite not acting on a campaign promise to declare it a currency manipulator on his first day in office.
“Well they, I think they’re grand champions at manipulation of currency. So I haven’t held back,” Trump said. “We’ll see what happens.”
During his presidential campaign Trump frequently accused China of keeping its currency artificially low against the US dollar to make Chinese exports cheaper, “stealing” US manufacturing jobs.
However, US Secretary of the Treasury Stephen Mnuchin on Thursday told CNBC that he was not ready to pass judgement on China’s currency practices.
Asked if the Treasury was planning to name China a currency manipulator any time soon, Mnuchin said that he would follow the normal process of analyzing the currency practices of major US trading partners.
The Treasury is required to publish a report on these practices on April 15 and Oct. 15 each year.
“We have a process within Treasury where we go through and look at currency manipulation across the board. We’ll go through that process. We’ll do that as we have in the past,” Mnuchin said in his first televised interview since formally taking over the department last week. “We’re not making any judgments until we go continue that process.”
A formal declaration that China or any other country manipulates its currency requires the Treasury to seek negotiations to resolve the situation, a process that could end in punitive tariffs on the offender’s goods.
The Treasury designated Taiwan and South Korea as currency manipulators in 1988, the year that US Congress enacted the currency review law.
China was the last country to get the designation, in 1994.
The current situation is complicated, because the People’s Bank of China has spent billions of dollars in foreign exchange reserves over the past year to prop up the yuan to counter capital outflows.
The IMF last year said that the yuan’s value was broadly in line with its economic fundamentals.
In the interview, Trump also spoke favorably about the border adjustment tax proposal being pushed by US Republicans in Congress, but did not specifically endorse it.
“I certainly support a form of tax on the border,” he said. “What is going to happen is companies are going to come back here, they’re going to build their factories and they’re going to create a lot of jobs and there’s no tax.”
White House spokesman Sean Spicer on Thursday also defensed the border adjustment, disputing the claim that it could lead to higher consumer prices.
“That benefits our economy, it helps American workers, it grows the manufacturing base,” Spicer told reporters at a White House briefing.
Trump spoke to reporters after meeting with more than 20 chief executives of major US companies to discuss ways to return manufacturing jobs to the US.
Many CEOs of large multinationals back the border adjustment tax. The chiefs of 16 companies, including Boeing Co, Caterpillar Inc and General Electric Co, sent a letter to Congress on Tuesday urging support for it.
A border adjustment has emerged as the most controversial segment of the Republican tax reform blueprint in the US House of Representatives. Under the House plan, it would raise more than US$1 trillion in revenue to help pay for a corporate tax cut.
The Chinese Ministry of Foreign Affairs yesterday said that China has no intention of using currency devaluation to its advantage.
Ministry spokesman Geng Shuang (耿爽) made the comments at a daily news briefing in Beijing.
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