In response to a Reuters report that suggested Chinese officials were thinking about letting the yuan depreciate next year, a senior trade adviser to President-elect Donald Trump told Reuters on Thursday that the next government would not look “fondly” on any attempt by China to manipulate its currency.
As stated by Peter Navarro, Trump’s incoming senior adviser for manufacturing and trade, the White House will not obstruct the Treasury Department’s biennial review investigating currency manipulation by foreign trading partners. “But I don’t think the Trump Treasury Department would be very fond of Chinese currency manipulation,” he continued. China’s currency manipulation history is widely recognized.
For the first time since 1994, the U.S. government declared China a currency manipulator in 2019, during Trump’s administration. The following year, the decision was annulled.
While this move is more symbolic than substantive, it would nevertheless demonstrate that Trump plans on launching an unprecedented trade war with the second-largest economy in the world, as he frequently promised throughout the campaign. The 2019 action came at a time when the Chinese government allowed the value of its currency to decline in relation to the US dollar.
Instead of waiting for the biannual Treasury report, Navarro, who was also an economic adviser during Trump’s first term, stated that if China devalues its currency, Trump may decide to further increase tariffs.
As Navarro said, “There’s appropriate remedies there,” “If (Trump) didn’t want to wait for any report, he could just raise tariffs higher.”
