The day before Donald Trump sits down to negotiate what investors hope will be a cease-fire in his trade war with China, the US president reminded the world of one key economic complaint: currency manipulation.
Early on Friday in Buenos Aires, Trump signed what he called a “model” trade agreement with the presidents of Mexico and Canada. He said the new North American deal “dramatically raised standards for combating unfair trade practices confronting massive subsidies for state-owned enterprises and currency manipulation that hurt workers in all three of our countries.”
“The currency manipulation from some countries is so intense, so bad,” Trump said at the signing, without naming China specifically.
Trump has repeatedly criticized China as a currency manipulator in tweets. But Treasury Secretary Steven Mnuchin has refrained from officially designating the nation as a manipulator. In October he issued a report declaring that the US is “closely watching” Beijing for its lack of currency transparency amid a depreciation of the yuan. Treasury’s semi-annual report was seen as a final warning shot at China.
Trump is set to meet with Chinese President Xi Jinping over dinner on Saturday in Argentina, where both leaders are attending the Group of 20 summits. Each side has signaled eagerness for a cease-fire in the trade war, though Trump has said he is ready to impose more tariffs if the meeting doesn’t yield progress.
The trade conflict between the world’s two largest economies has seen the onshore yuan slump about 6 percent against the greenback this year, raising speculation that China has deliberately weakened its currency and drawing Trump’s ire. A weaker yuan lessens the impact of US tariffs on Chinese exporters.
The US dollar has appreciated against all its major counterparts in 2018 and the Bloomberg Dollar Index, which measures the American currency against a basket of peers, has climbed more than 4 percent over the same period.