In his very first TV interview hosted by CNBC’s Becky Quick newly appointed Treasury Secretary Mnuchin declined to do that which President Trump repeatedly promised Americans during the presidential campaign: label China a currency manipulator. When asked about the Chinese being manipulators of the Yuan U.S. dollar exchange rate Mnuchin went political quickly indicating that the Treasury has a regular and recurring process to determine if any of our trading partners manipulate their currency to their advantage and our disadvantage, adding, with respect to China “we’re not making any judgments.”
President-elect Trump, unlike candidate Trump, did the same thing in one of his early January interviews telling the WSJ he wouldn’t call the Chinese manipulators on the first day.
Candidate Trump told his supporters he would call out China. Candidate Trump promised quick and decisive action on trade with China.
U.S. Trade Deficit With China (Imports, Exports, Balance), 2000 - 2016
Is it a lie? The realpolitik political operative will tell you that was just campaign talk and not a lie. They would explain the real world is far more complex and requires calmer more deliberate actions for executives.
The common man, the typical voter, would call it a lie. They would argue they were deceived…again! The common man would be right, and would show a chart like the one below to prove it.
U.S. Dollar vs Chinese Yuan August 2015 - February 2017
It is a matter of fact the Communist controlled People’s Bank of China (PBoC) manipulates the FX and domestic money markets to fix the Yuan against the U.S. dollar every single day. The PBoC literally published the Yuan fix each day for all to see. Today, February 23, 2017 it was set at 6.8695 Yuan per Dollar.
Why the lie? Trump and his team have balked in the face of push-back and threats from the multi-national corporate world, and a lack of courage to accept the unavoidable costs of correcting America’s massive trade imbalance. There are no painless solutions to fixing America’s trade policy and reducing an $800 billion yearly trade deficit. There are negative short-run economic consequences that must be endured.
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