One of the biggest promises broken by President Trump in his young presidency is his pledge to immediately label China as a currency manipulator. As we noted during the campaign and after he was elected, experts believe that China has not been manipulating its currency since the middle of 2014.
“Since then, China has sold about $1 trillion to keep the yuan from falling, rather than buying dollars to keep it from rising, which would be manipulation,” said C. Fred Bergsten, senior fellow and founding director of the Peterson Institute for International Economics. Bergsten was one of the first people to call attention to China’s currency manipulation in the 2003-to-2014 period, when China bought more than $300 billion a year to artificially keep the currency weak.
So it would be no surprise that Trump would have to give up on this pledge, since it would be rather difficult for the Treasury Department to argue that China met the legal requirements for currency manipulation. (In any case, all the label means is that the treasury secretary would begin negotiations to try to deal with the situation.)
But look at how Trump’s statements have evolved. In recent weeks, he has begun to claim that China stopped manipulating the currency because he was elected — or even because he raised the issue during the campaign.
Before the election
“The fact is that China is a bully to us, and they come out with statements — No, no, it’s fair trade. It’s not fair trade. They send their stuff here. We send over there. We pay tax and we pay tariffs and we pay all sorts of things. It’s not fair. What they do to their currency and manipulation makes it impossible for our companies to compete.” (June 17, 2015)
“I will direct my Secretary of the Treasury to label China a currency manipulator. China is a currency manipulator. What they have done to us by playing currency is very sad. And I don’t blame them. They’ve been very smart. I blame our politicians for letting this take place. So easy to stop. So easy to stop.” (Oct. 22, 2016)
After the election
“I mean, look, we’re being hurt very badly by China with devaluation.” (Dec. 11)
After becoming president
“Every other country lives on devaluation. You look at what China’s doing, you look at what Japan has done over the years. They play the money market, they play the devaluation market, and we sit there like a bunch of dummies.” (Jan. 31, 2017)
“You know when you talk about, when you talk about currency manipulation, when you talk about devaluations, they are world champions. And our country hasn’t had a clue, they haven’t had a clue.” (April 2)
“President Xi, from the time I took office, they have not been currency manipulators.” (April 21)
“I have been talking about currency manipulation for a long time but I have to tell you, during the election they stopped.” (April 29)
“I did say I would call China, if they were, a currency manipulator early in my tenure. And then I get there. Number one, they — as soon as I got elected, they stopped. They’re not going — it’s not going down anymore, their currency. … I would say that I was the one that got them to stop.” (April 30)
“First of all, since I started running, they haven’t increased their — you know, they have not manipulated their currency. I think that was out of respect to me and the campaign. But literally, since when I — when it looked like I was starting to win the Republican primaries, which was actually pretty early, but they haven’t been.” (May 1)
“You know, since I’ve been talking about currency manipulation with respect to them and other countries, they stopped.” (May 4)
(The last comment was made during an interview with the Economist, which was conducted with Treasury Secretary Steve Mnunchin. Mnuchin added: “Right, as soon as the president got elected they went the other way.” Perhaps he missed the fact that Trump moved the date for the China’s shift to the early part of his campaign.)
We sought comment from the White House about the president’s evolving claims about when China ended currency manipulation but did not get a response.
The Pinocchio Test
We gave the president Four Pinocchios for saying that China was a currency manipulator when it was not one. We’re pleased that the president has finally recognized that fact.
But now he earns another Four Pinocchios for falsely claiming that China stopped manipulating its currency because a) he was elected or b) he took the oath of office or c) he started running for the president. China stopped manipulating its currency well before Trump ever announced he was running for president. As Bergsten put it, “This is a really tall one.”
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