The Trump administration has once again declined to brand China a currency manipulator, but it did target that country and five others for special monitoring for what the administration says are practices that are worsening America's trade deficit.
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In a report it must issue every six months, the administration said Friday that no country met the criteria to be labeled a currency manipulator. But six nations — China, Japan, South Korea, India, Germany and Switzerland — were placed on a watch list subjecting them to added U.S. pressure to lower trade surpluses.
India is new to the list. The five other nations had been cited in October. The report comes at a time President Donald Trump is threatening to impose penalty tariffs on China and other nations.
Those threats have sent global financial markets on a roller coaster ride, with stocks plunging when the threat of a tit-for-tat trade war looked imminent and then rebounding when both sides cooled the tough talk. Trump first threatened tariffs on $50 billion of Chinese goods and then asked his top trade negotiator to find another $100 billion in Chinese products to target.
In addition, the administration recently imposed tariffs on aluminum and steel imports into the United States in an effort to support U.S. producers.
No country has been labeled a currency manipulator by the United States since the Clinton administration tagged China in 1994. Such a designation subjects a country to negotiations in an effort to lower the trade gap.
If the U.S. is not satisfied with the trade concessions offered by the targeted country it can impose punitive tariffs, although the offending country can appeal to the Geneva-based World Trade Organization.
In a statement accompanying the new report, Treasury Secretary Steven Mnuchin said the administration is "working vigorously to ensure that trade is free, fair and reciprocal." He said Treasury will continue to monitor and combat unfair currency practices while encouraging countries to pursue reforms to reduce large trade imbalances.
The new report cited China's "extremely large and persistent" trade surplus with the United States and "the increasingly non-market direction of China's economic development," which the report said poses growing risks to China's trading partners and the global economy.
The U.S. trade deficit in goods and services totaled $566 billion last year, the largest annual deficit since 2008 and up 12 percent from 2016. The deficit in goods with China hit a record $375.2 billion in 2017, as usual the largest imbalance the United States runs with any country.
The new currency report said that India, which was added to the monitoring list in this report, had a "significant bilateral goods" surplus with the United States of $23 billion last year.
The report noted that Germany has the world's largest current account trade surplus in dollar terms and has held that position for most years since 2011. As previous reports have done, Treasury urged Germany to take steps to boost domestic demand as a way to increase imports of U.S. and other foreign goods.