The U.S. Treasury has labeled Switzerland and Vietnam currency manipulators, heightening tensions with the two countries in the waning days of the Trump administration.
The move could pave the way for punitive action by Washington unless the dispute can be resolved through “bilateral involvement.”
In a statement accompanying its semi-annual exchange rate report, the U.S. Treasury Department said Vietnam and Switzerland had each kept their currencies lower to avoid “ effective balance of payments adjustments ” and, in the case of Vietnam, “ to gain an unfair competitive advantage in international trade. . ”.
The foreign exchange report gained notoriety for its focus on China’s currency policy in recent years. In 2019, the Trump administration labeled 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 ‘phase one’ trade deal was reached between Donald Trump and Xi. Jinping, the Chinese president.
In Wednesday’s report, China remained on the Treasury’s checklist for its currency policy, 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 Mr Trump’s presidency, the US Treasury has taken a more aggressive approach to the currency practices of its trading partners compared to previous US governments. This will pose a dilemma for the incoming treasury in Joe Biden’s administration, which will be led by former Fed Chairman Janet Yellen.
“The Treasury Department today took a strong step to secure economic growth and opportunities for US workers and businesses,” said Steven Mnuchin, the US Treasury Secretary. “Treasury will follow up on its findings regarding Vietnam and Switzerland to work to eliminate practices that create unfair advantages for foreign competitors.”