More than one month into President Donald Trump’s term, the new administration still has not moved ahead with fulfilling Trump’s promise to label China a currency manipulator.
But both Trump and Treasury Secretary Steven Mnuchin left the door open to acting soon.
In a Thursday interview with CNBC, Mnuchin did not rule out that the administration could designate Beijing a currency manipulator in the coming months. Treasury issues a semiannual report on other countries’ intervention in foreign exchange markets, with the next report due in April.
“We have a process within Treasury where we go through and we look at currency manipulation across the board, and we’ll go through that process,” Mnuchin said, answering a specific question about China. “So, we’ll do that as we have in the past, and we’re not making any judgments until we continue that process.”
Speaking to Caterpillar CEO Doug Oberhelman at a White House roundtable on Thursday, Trump said the government needs to step in to prevent currency manipulation from having an adverse effect on U.S. industry. He did not specifically mention China.
“When we raise the dollar and when we let other people manipulate their currencies, it’s the one thing that stops you,” Trump said to Oberhelman. “We have to give you a level playing field, we have to let other countries give you a level playing field.”
Labeling China a currency manipulator was a key economic promise of Trump’s presidential campaign. The U.S. government has a few tools, through both domestic and international rules, to take action if countries are keeping their currency’s value artificially low in order to make their exports cheaper.
Since Trump’s election, however, China has allowed the yuan to strengthen against the dollar.
Derek Scissors, a senior fellow at the American Enterprise Institute focused on economic relations with China, said the yuan’s recent strength could become a factor in how to determine if Beijing is manipulating its currency.
The current exchange rate is 6.87 yuan to one dollar, according to Bloomberg, and the currency has been strengthening since late last year, when it bottomed out at 6.96 yuan to the dollar.
Complicating matters further is the current staffing shortage at Treasury, the White House, and other agencies, which likely makes it more difficult to determine what timeframe to use to assess China’s possible yuan manipulation, Scissors said. The Senate still has not confirmed Trump’s nominees for Commerce secretary and the U.S. Trade Representative, and the president has yet to make numerous mid-level nominations at all three departments.
“He doesn’t have the people to do a proper evaluation,” Scissors said in a Thursday interview. “In the world where China changes its policy in November, things are more complicated. And that’s where you really need your staff to go forward with this.”