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The U.S. Treasury has labeled Switzerland and Vietnam as currency manipulators, increasing tensions with the two countries in the last days of the Trump administration.
The measure could pave the way for punitive action by Washington unless the dispute can be resolved through a “bilateral compromise.”
In a statement accompanying its semi-annual foreign exchange report, the US Treasury said that Vietnam and Switzerland had kept their currencies lower to avoid “effective balance of payments adjustments” and, in the case of Vietnam, ” to obtain an unfair competitive advantage in international trade ”.
The currency report has gained notoriety for its focus on China’s currency policies in recent years. In 2019, the Trump administration branded Beijing a currency manipulator at the height of the trade war between the world’s largest economies, but said this was no longer the case in January 2020 after the trade deal was reached. of “phase one” between Donald Trump and Xi Jinping, the Chinese president.
In Wednesday’s report, China remained on the Treasury’s watch list for its foreign exchange policies, which also includes Japan, South Korea, Germany, Italy, Singapore, Malaysia, Taiwan, Thailand and India. The last three countries were added to the watch list on Wednesday, while Ireland was removed.
During the Trump presidency, the US Treasury has taken a more aggressive approach to the exchange rate practices of its trading partners compared to previous US administrations. This will present a dilemma for the incoming Treasury in the Joe Biden administration, which will be led by former Fed chair Janet Yellen.
“The Treasury Department has taken a strong step today to safeguard economic growth and opportunity for American workers and businesses,” said Steven Mnuchin, US Secretary of the Treasury. “The Treasury Department will follow up on its findings regarding Vietnam and Switzerland to work toward eliminating practices that create unfair advantages for foreign competitors.”
