Northwest Arkansas Democrat-Gazette
U.S. says 2 trade partners currency manipulators
WASHINGTON — The Trump administration Wednesday labeled Vietnam and Switzerland as currency manipulators, accusing them for the first time of improperly intervening in foreign exchange markets.
It was the first time that the Treasury Department has applied that label to either country, and it will require Vietnam and Switzerland to enter into negotiations with the United States and the International Monetary Fund to address the situation.
This is the third time that the Trump administration has taken the fairly unusual step of labeling a country as a currency manipulator. It applied the label to China in 2019 — the first time since 1994 — while the two countries were negotiating a trade deal. The administration later dropped the official designation, but the Chinese yuan has remained on the Treasury Department’s list of currencies it is monitoring.
The decision to designate Vietnam and Switzerland came at a moment of heightened volatility in foreign exchange markets, which have been rattled by the coronavirus pandemic. The report covers activity from July 2019 to June 2020, which include several months before the pandemic set in.
“The Treasury Department has taken a strong step today to safeguard economic growth and opportunity for American workers and businesses,” Treasury Secretary Steven Mnuchin said in a statement.
The decision to label Vietnam a currency manipulator is the latest move by the Trump administration to take aim at that country over its trade practices. In October, the administration opened an investigation into Vietnam’s trade practices, saying it would begin looking into whether Vietnam has undervalued its currency — the dong — to make its products unfairly cheap abroad, and at its importation and use of timber that the administration said was illegally harvested and traded.
U. S. imports from Vietnam have risen sharply in recent years as the Trump administration placed tariffs and other restrictions on goods from China, increasing the U.S. trade deficit in goods from Vietnam.
Vietnam is America’s 13th-largest trading partner, according to the U.S. Trade Representative, and many U.S. companies have factories there.
The report also said that Switzerland, which is America’s 16th-largest trading partner, “conducted large-scale one-sided intervention, significantly larger than in previous periods, to resist appreciation of the franc and reduce risks of deflation.”
Overall U. S. trade with Switzerland is fairly balanced, according to government statistics, though the United States sells more services to Switzerland, including industrial processes and research and development, while Switzerland exports more goods to the United States.
Those goods include products such as pharmaceuticals, chemicals, medical instruments and clocks.
Janet Yellen, who if confirmed will be Presidentelect Joe Biden’s treasury secretary, has previously indicated a more understanding view of monetary policy decisions that have consequences for exchange rates. In 2019, she said, “It’s really difficult and treacherous to define when a country is gaming its currency to gain trade advantages.”