Trump on Wednesday accused China and Europe of enjoying a “huge currency manipulation game.” He stated the United States ought to match that effort, a move that instantly contradicts official U.S. policy not to manipulate the dollar’s value to achieve trade benefits.
In a tweet, the president stated if America doesn’t act, the nation will proceed “being the dummies who sit back and politely watch as different countries proceed to play their games — as they have for so many years.”
Trump’s own Treasury Department in May discovered that no country meets the criteria of being labeled a currency manipulator, though the report did put China and eight other countries on a watch list.
A nation manipulates its currency when it drives down the value to make its exports cheaper and foreign imports more expensive.
As a candidate in 2016, Trump repeatedly charged that China was manipulating its forex and as president, he would instantly label China as a currency manipulator.
However, after taking office, Trump’s Treasury Department has issued five reports on the topic, required by law every six months. In each report it said no country met the standards to be labeled a currency manipulator.
Trump’s tweet appeared to have no impact on currency markets, a situation that will likely change if Treasury Secretary Mnuchin began threatening to make use of currency manipulation to drive down the dollar’s value.
The Treasury secretary has the job of commenting on the dollar’s worth and in addition implementing an intervention to buy or sell dollars in currency markets to influence the greenback’s value. U.S. administrations for many years have pledged in the international communique to not intervene in currency markets for the aim of influencing trade flows.