Mnuchin defends Trump's 'warning shot' tweet on China currency manipulation

Mnuchin defends Trump's 'warning shot' tweet on China currency manipulation
© Greg Nash

Treasury Secretary Steven MnuchinSteven Terner MnuchinMexico's president presses Pompeo on reuniting migrant families Senators seek data on tax law's impact on charitable giving 'Our Cartoon President' takes on Mueller probe, NATO and Melania in second season MORE said Tuesday that President TrumpDonald John TrumpSasse: Trump shouldn't dignify Putin with Helsinki summit Top LGBT group projects message onto Presidential Palace in Helsinki ahead of Trump-Putin summit Hillary Clinton to Trump ahead of Putin summit: 'Do you know which team you play for?' MORE’s tweet targeting China’s “unacceptable” currency devaluation was a “warning shot,” even though his own staff cleared Beijing of wrongdoing last week.

Mnuchin told CNBC that Trump’s tweet was meant to prevent China and Russia from reverting to efforts to devalue their currencies. He said that while China and Russia had devalued their currencies throughout the Obama administration, they reversed course after Trump’s election.

“They’ve used a lot of their reserves to actually support the currency, so, you know, the president wants to make sure they don’t change these plans and he’s watching it,” Mnuchin said.

Trump tweeted Monday that both China and Russia “are playing the Currency Devaluation game as the U.S. keeps raising interest rates."

"Not acceptable!" the president tweeted.

But the Treasury Department declined to label China a currency manipulator in its twice-yearly report on foreign exchange, released Friday, despite the president’s repeated campaign promises to do so.

Mnuchin on Tuesday wasn't asked about and did not address whether Trump's tweet was meant to criticize the Federal Reserve. The central bank is aiming to raise historically low interest rates toward a neutral level without upsetting the economy as the recovery from the 2008 recession enters its final stretch.

Trump’s criticism of Chinese trade and economic policy — and the U.S. politicians who he said enabled it — was a centerpiece of his campaign. He routinely accused China of undermining American manufacturers, destroying U.S. jobs and cheating the country through unfair trade deals signed by “stupid” career politicians.

Trump repeatedly promised to label China a currency manipulator, but the Treasury Department has not done so since he took office in 2017. But the president has threatened up to $150 billion in tariffs on Chinese imports to the U.S., spurring retaliation from Beijing and fears of a burgeoning trade war.

Chinese President Xi Jinping has made some slight concessions to Trump on U.S. auto imports and access to financial markets, but those promises are seen by critics of Beijing as long-promised and underwhelming reforms.

Trump has expressed interest in rejoining the Trans-Pacific Partnership (TPP), the massive trade pact the president pulled the U.S. out of last year, to open American exports to a wider market and gain influence over the world economy.

Though Trump had fiercely criticized the TPP, often in graphic terms, he said he’d be willing to rejoin if it offered a better deal for the U.S. The TPP was finalized earlier this year, and though the 11 other member nations would likely welcome the U.S., material changes to the deal are unlikely.

Mnuchin said Tuesday that Trump’s reconsideration of the TPP has nothing to do with China, but is rather an effort to partner with other countries to fulfill the White House trade agenda.

“It is not a question of if we are in or not in. The real question is will we make the progress on trade that we want, and I’m confident that we will,” Mnuchin said.

“This isn't about protectionism. This isn’t about tariffs,” he added. “This is to make sure we have free and fair reciprocal trade.”