Trump has informed that some of U.S.'s trading partners, mainly China, manipulated their currency but has since backed off that claim, and acknowledged China has not weakened the Yuan to make exports cheaper.
No major trading partner of the USA was named a currency manipulator in a latest Treasury report on the foreign exchange policies of these countries, though a list including six countries whose polices were deemed to require close monitoring was left unchanged.
The US Department of Treasury yesterday concluded that no major trading partner of the US met the Congressional standards for currency manipulation in the second half of 2016.
The department, however, concluded that no major US trading partner is manipulating its currency to gain an unfair trade advantage, suggesting President Donald Trump has backed away from his campaign pledge to label China a currency manipulator.
"I think the United States made a decision to forego (labeling China a currency manipulator) this time because it wants China's cooperation on North Korea", said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.
The enhanced communication between China and the United States is conducive to the healthy development of bilateral trade and investment, he said.
Trump's top advisers earlier this week seemed to be priming the media for the reversal in Trump's stance. However, the U.S. Treasury States did not name Taiwan as a currency manipulation nation in the report.
Trump has softened his rhetoric against China's trade practices as Beijing has intervened in foreign exchange markets to prop up the value of its yuan, and as he looks to China for help dealing with rising tension on the Korean peninsula.
The move was apparently taken out of consideration for China, which the USA hopes will help rein in North Korea's nuclear and missile programs. Mr. Xi and China may decide to make some gesture toward North Korea to look responsive, but, in fact, the world still faces, this coming weekend, the prospect of serious trouble in the Korean peninsula with the combination of the big US military exercise, the arrival of the USA carrier battle group, impending South Korean presidential elections, and North Korean leader Kim Jong Un's marking the birthday of his grandfather, the founder of his country.
Su Jian, an economics professor at Peking University, said Trump's remarks showed that China and the USA have reached consensus on the currency issue, given that China doesn't want the RMB to devaluate, while the USA doesn't want a strong dollar.
Treasury Secretary Steven Mnuchin pledged to continue to monitor currency practices closely, saying that an essential component of the Trump administration's strategy is to ensure that American workers and companies face a level playing field when competing internationally.
"When the President fails to label them a currency manipulator, he gives them a green light to steal our jobs and wealth time and time again", he said. He publicly retreated from that position after meeting with Chinese President Xi Jinping in Florida last weekend.
Schumer also said that the best way to get China to cooperate on North Korea was to be tough on them with trade, which is first thing the Chinese government "cares about".
He said progress on trade was needed to narrow the deficit between the two countries but that should be achieved through increasing USA exports to China, not cutting U.S. imports of Chinese goods.
"The basic message is that Japan needs to expand its domestic demand and one can read this as them telling Japan to import more American goods", said Minami of the Norinchukin Research Institute.