Treasury Secretary Steven Mnuchin sought Tuesday to explain away a head-scratching tweet from President Trump a day earlier accusing China and Russia of currency manipulation — a finding at odds with a report just issued by Mnuchin’s department.
Taking to Twitter on Monday, Trump wrote that the two countries were improperly manipulating their currencies in a way that gives them unfair trade advantages.
“Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!” the president wrote on Twitter.
The accusation, delivered without any evidence or corroboration, directly contradicted a report issued Friday by the Treasury Department. The report did not accuse either country of artificially lowering the value of its currency, Instead, it found that China’s currency had recently moved in a direction that should benefit U.S. exporters.
Asked about the contradiction Tuesday during an appearance on CNBC, Mnuchin offered this explanation: “It was a warning shot at China and Russia about devaluation.”
Mnuchin noted that China had engaged in such manipulation in the past.
“It’s a warning shot to make sure China doesn’t devalue the currency as they have in the past,” he told the hosts of “Squawk Box.”
The White House is also trying to address confusion from Trump’s Twitter post that suggested he was furious at the Federal Reserve for moving to raise interest rates. The White House had not previously revealed what precisely Trump found to be “not acceptable!” and it led to some conjecture that he could be miffed that the central bank was raising interest rates.
“The President respects the independence of the Federal Reserve,” Lindsay Walters, deputy White House press secretary said Tuesday.
Trump is locked in a tense trade battle with China, as he has accused Beijing of closing off markets to American exporters while shipping cheap products into the United States in a way that harms U.S. manufacturers. During his 2016 campaign, Trump defiantly said he would label China a “currency manipulator” on his first day in office.
The United States has not formally labeled China a currency manipulator, a move that triggers a process of consultation between both countries and could heighten tensions.
Democrats and Republicans in the past have accused Beijing of improperly devaluing its currency in a way that makes Chinese exports more attractive to foreign buyers, but China has recently moved away from this in the face of immense international pressure.
That is one reason Trump has declined to label China a currency manipulator through a formal Treasury Department report. He also has said that he did not want to do it because he wanted to preserve a good relationship with China on issues such as containing North Korea’s nuclear weapons program.