Trump personally pressed Treasury Secretary Steven Mnuchin into labelling China a “currency manipulator,” a move that Mnuchin resisted, The Washington Post reported Thursday, citing three sources with knowledge of the matter.
The US Treasury designated China as a “currency manipulator” two weeks ago, despite Beijing’s financial moves not formally meeting the Treasury’s internal criteria for that status.
According to the report, Trump exerted “immense” pressure on Mnuchin earlier this month, after the Chinese currency’s exchange rate reached a certain threshold.
The yuan was weakening throughout the year, the report says, and Trump insisted that Beijing caused it intentionally, as a weaker currency makes a country’s exports cheaper and therefore more competitive. However, a number of experts concluded that the yuan weakened due to natural reasons, such as a weakening Chinese economy.
Earlier in May, the Treasury cleared China of currency manipulation allegations, The Washington Post reports. In its August announcement, the department did not elaborate on what exactly had changed in the intervening months.
“In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past,” the Treasury said in a statement, without providing further details. “The context of these actions and the implausibility of China’s market stability rationale confirm that the purpose of China’s currency devaluation is to gain an unfair competitive advantage in international trade.”
The designation is largely symbolic, as possible punitive actions have long been outweighed by measures already taken by Trump against China, according to Bloomberg. Forbes’s Kenneth Rapoza speculated that the designation will give China “less wiggle room, because if they weaken the yuan to make up for tariffs, tariffs will likely go up to compensate.”
Still, per US Treasury rules, as a consequence of the designation, Mnuchin “will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions,” the department said in a statement. The IMF has already expressed its disagreement with the designation, The Washington Post reports.