President Trump, Treasury Secretary Mnuchin Discuss Currency Manipulation
In a one-on-one interview last Friday with Reuters, President Donald Trump discussed currency manipulation. While the commander in chief would not say if he would direct the U.S. Treasury Department to officially designate China a currency manipulator, he described the nation as the “grand champion” of currency manipulation.
At a roundtable at the White House the day before the interview, President Trump addressed currency manipulation more generally, telling Caterpillar CEO Doug Oberhelman, “When we raise the dollar and when we let other people manipulate their currencies, it’s the one thing that stops you … We have to give you a level playing field, we have to let other countries give you a level playing field.”
Last Thursday, Treasury Secretary Stephen Mnuchin also addressed this issue. He explained that his department would follow the “normal process’ of analyzing the currency practices of major U.S. trading partners when it comes to China. Mnuchin noted, “We're not making any judgments until we go continue that process.” The Treasury Department is set to issue its next report on currency issues on April 15, 2017. As Reuters explained, “A formal declaration that China or any other country manipulates its currency requires the U.S. Treasury to seek negotiations to resolve the situation, a process that could end in punitive tariffs on the offender's goods.”
In mid-February, three Democratic members of the U.S. House, Rep. Sander Levin (D-MI), Rep. Tim Ryan (D-OH), and Rep. Bill Pascrell (D-NJ) urged the president to support legislation that would require the U.S. government to treat manipulated exchange rates as export subsidies. Click here to read the letter.
As the Metals Service Center Institute notes in its advocacy agenda, Currency manipulation by other countries puts U.S. manufacturers at a competitive disadvantage globally, costing the United States jobs and lost economic growth. Economist Arthur Laffer has said, “The two-speed recovery has shown … that persistent currency undervaluation has benefitted the currency manipulators at the expense of countries allowing the flexible adjustment of exchange rates …” Laffer estimates that, as of 2012, the scope of currency manipulation was $1.5 trillion per year. The EPI estimates ending currency manipulation would reduce the United States’ overall trade deficit by $200 billion to $500 billion over three years and would increase annual U.S. gross domestic product by $288 billion to $720 billion. The lower trade deficit and higher growth would create 2.3 million to 5.8 million new jobs.