The Trump administration on Tuesday once again declined to label China a currency manipulator, even though Donald Trump repeatedly pledged during last year's presidential campaign that he would do so as soon as he took office.
Instead, the administration, in a report it must issue every six months, kept China and four other nations — Germany, Japan, South Korea and Switzerland — on a watch list for special attention because of their large trade surpluses with the United States.
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The decision not to brand China a currency manipulator had represented one of the sharpest reversals from a Trump campaign stance. He explained in April that he believed China had stopped manipulating its currency and that it was more important to focus on cooperation with Beijing in dealing with North Korea.
The administration's decision came in a report that the Treasury Department is required to send Congress each April and October giving a determination of whether any country is manipulating its currency to gain unfair trade advantages against the United States.
The administration did sound a tough line in the report about attacking America's huge trade deficits with other nations.
"The United States should not and will not bear the burden of an international trading system that unfairly disadvantages our exports and unfairly advantages the exports of our trading partners," the report said.
Treasury Secretary Steven Mnuchin said in a statement accompanying the report that "this administration remains vigilant to ensure that trade is free, fair and reciprocal with our partners."
If the report had found evidence of currency manipulation, the administration would have been required to start intensive negotiations to end the practice and if those talks failed, the United States could impose economic sanctions against the offending nation. However, those sanctions would have to win approval from the World Trade Organization.
No nation has been branded a currency manipulator by the United States since the Clinton administration labeled China as such in 1994.
The five nations placed on the monitoring list in the new Treasury report had also been singled out in the April report as well as a sixth country — Taiwan. The new report said Taiwan had been dropped from the watch list because since the spring it had reduced the scale of its intervention on in foreign currency markets.
The administration's list of countries in April was identical to the nations placed on a monitoring list by the Obama administration in its final report in 2016.
During last year's campaign, Trump had repeatedly called China a currency manipulator, saying, "They're killing us" by devaluing their currency to make it harder for American companies to compete against Chinese products. In the campaign, Trump had threatened to impose tariffs of up to 45 percent on Chinese goods if they didn't reform their trade practices.
Since taking office, the Trump administration has taken up talks with China aimed at lowering America's huge deficit with the country but so far has refrained from imposing the punitive tariffs Trump talked about during the campaign.
Treasury report said that the five countries placed on the monitoring list had met at least two of three criteria — a large trade surplus with the United States, a large surplus with the world or frequent intervention in currency markets.
Countries trying to manipulate their currencies to boost their export sales will intervene to lower the value of their currency against other currencies such as the U.S. dollar. A weaker currency makes exports cheaper on global markets while making imports more expensive in the home market.