Under the plan, the commerce secretary would designate the practice of currency manipulation as an unfair subsidy when employed by any country, instead of singling out China, the newspaper reported. American companies could then bring anti-subsidy actions to the U.S. Commerce Department against China or other countries, it said.
The discussions are part of a strategy being pursued by the White House’s new National Trade Council to balance the goals of challenging China on certain policies while keeping broader relations on an even keel, the paper said. The Trump administration would avoid, at least for now, making claims about whether China is manipulating its currency, it said.
According to Bloomberg, if the proposal is enacted it would suggest Trump is taking a softer approach after campaign threats to label China a currency manipulator and impose punitive tariffs. It also opens the door for action against other countries Trump and his team have singled out for currency manipulation, including allies Japan and Germany -- a move that may prompt them to join China in countering the policy.
Federal Reserve
Former president Barack Obama’s administration decided against naming currency practices as a subsidy out of concern that doing so would violate World Trade Organization rules and spur similar measures against U.S. exports, the report said. Other countries could argue that Federal Reserve policies that weaken the dollar qualify as subsidies, it added.
During a briefing with Japanese Prime Minister Shinzo Abe in Washington on Feb. 10, Trump vowed that the currencies of the U.S., China and Japan would soon be on a “level playing field.” He didn’t explain what he meant by the phrase. Abe has said it is wrong to say that Japan is devaluing the yen.
German Chancellor Angela Merkel last month rejected a charge from Peter Navarro, who heads the National Trade Council, that Germany’s trade surplus is a sign of an undervalued currency. The euro’s exchange rate was the responsibility of the European Central Bank and the German government had long upheld the bank’s independence, Merkel said.
The report on China currency policy comes after Trump rang President Xi Jinping last week and agreed to respect the One-China policy on Taiwan. The policy has been the basis of U.S.-China ties since the 1970s.
Tensions with China rose after Trump tweeted about his protocol-breaking December phone conversation with Taiwanese President Tsai Ing-wen and subsequently questioned the One-China policy in interviews.