Trump delivers on promise as Treasury brands China a ‘currency manipulator’
President Donald Trump delivered on a promise to label China a currency manipulator after its currency, the yuan, fell to its lowest value in more than a decade.
A weaker yuan, relative to the U.S. dollar, means Chinese goods can be exported more cheaply to the United States. A devalued Chinese currency, in turn, blunts the impact of Trump's tariffs on Chinese imports.
Trump applied the "currency manipulator" label to China in an Aug. 5 tweet, before the Treasury Department issued a formal declaration.
"China dropped the price of their currency to an almost a historic low. It's called 'currency manipulation,' " Trump tweeted. "Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!"
The president's decision to label China a currency manipulator — which the United States last did in 1994 — represents an escalation of trade tensions with Beijing. Trump has long accused China of engaging in unfair trade practices, including intellectual property theft and the dumping of Chinese products on U.S. markets.
In a Treasury Department statement, Secretary Steve Mnuchin formally declared China a currency manipulator, as laid out under U.S. law. Mnuchin said Chinese authorities, who have "ample control" over the country's money supply, have openly acknowledged their central bank's ability to manipulate China's currency.
The Treasury Department's determination requires, under federal law, that the department engage with the International Monetary Fund to address China's exchange rate.
The Trump administration's declaration that China is a currency manipulator moves this promie from Promise Broken to Promise Kept.
Tweet by President Donald Trump, Aug. 5, 2019
Treasury Department statement, Aug. 5, 2019
Associated Press, "Lashing back, China lets yuan drop and halts U.S. farm purchases," Aug. 5, 2019
Reuters, "U.S. designates China as currency manipulator for first time in decades," Aug. 5, 2019
Trump on China: ‘They’re not currency manipulators'
As a candidate, President Donald Trump repeatedly promised that he would declare China a currency manipulator immediately after he took office.
Twelve weeks in, his mindset has apparently changed.
Trump raised eyebrows in an April 12 interview with The Wall Street Journal with this statement about China: "They're not currency manipulators."
The assessment was a stark departure from the campaign. In his 100-day contract with voters to "Make America Great Again," Trump said he would issue seven actions to protect American workers. Among them: "I will direct the Secretary of the Treasury to label China a currency manipulator."
In accepting the GOP nomination, Trump called out China for "outrageous theft of intellectual property, along with their illegal product dumping, and their devastating currency manipulation.
In his Oct. 22 Gettysburg speech, he reiterated the plan: "I will direct my secretary of the treasury to label China a currency manipulator. China is a currency manipulator. What they have done to us by playing currency is very sad. I don't blame them. They have been very smart. I blame our politicians for letting this take place."
As recently as April 2, 2017, this seemed to still be the plan. During an interview with the Financial Times, Trump said, "When you talk about currency manipulation, when you talk about devaluations, they are world champions."
Exactly 10 days later, Trump sat down for the Wall Street Journal interview with The Wall Street Journal. This interview coincided with Trump and Chinese President Xi Jinping meeting at Trump's Palm beach resort Mar-a-Lago, where they pledged to make progress on trade negotiations within the next 100 days.
According to the Journal, Trump switched gears because China hasn't been manipulating its currency for months and the declaration could pose a problem as both countries work to address the North Korean threat.
Trump held a joint press conference with NATO Secretary General Jens Stoltenberg on April 12. The conference led to the topic of China, and Trump deflected a question about the currency manipulation. He responded, "We're going to see."
Pressed by reporters to explain the reversal, press secretary Sean Spicer simply said, "Circumstances change."
With Trump on the record as saying the Chinese are "not currency manipulators, we rate this Promise Broken.
Politico.com, Trump vows to declare China a currency manipulator on Day One, November 10, 2015
Politico.com, Full text: Donald Trump 2016 RNC draft speech transcript, July 21, 2016
DonaldJ.Trump.com , Donald Trump's Contract with the American Voter, October 22, 2016
CNN.com, Trump Speaks in Pennsylvania; Examining Proposed Actions in First 100 Days of Trump Administration, October 22, 2016
Financial Times, Donald Trump in his own words, April 2, 2017
New York Times, Trump Isn't Wrong on China Currency Manipulation, Just Late, April 11, 2017
CNBC, Trump backtracks on China, April 12, 2017
The Wall Street Journal, Trump Says Dollar 'Getting Too Strong,' Won't Label China a Currency Manipulator, April 12, 2017
Email exchange with Philip I. Levy, Senior Fellow on Global Economy, Northwestern University Kellogg School of Management, April 12, 2017
Twitter, Timeline of Trump's statements on China as a Currency Manipulator, April 13, 2017