The US Treasury could label several countries as currency manipulators before President Donald Trump leaves office, according to analysts, as the coronavirus pandemic skews trade flows and widens US deficits with its trading partners. .
According to Reuters, currency experts say that Vietnam, Thailand, Taiwan and Switzerland run the risk of being declared in violation of the three criteria of the US Treasury to be classified as currency manipulation in the long-delayed report of the Treasury Department on the foreign exchange practices of major trading partners. They expect the report to be released within a few days.
To be labeled manipulative, countries must have at least a bilateral trade surplus of more than $ 20 billion with the United States, a foreign exchange intervention that exceeds 2% of GDP, and a global current account surplus that exceeds the 2% of GDP. While President-elect Joe Biden is expected to be less confrontational with US allies on trade matters, the new White House could find it politically difficult to immediately withdraw currency manipulation designations by the current administration.
According to Treasury trackers, Vietnam, Switzerland and Thailand exceeded the department's thresholds during the first and second quarters of 2020. Taiwan met all three criteria in the second quarter, but barely outperformed first-quarter currency intervention in the compiled data. by Brad Setser, former US Treasury economist, now part of Biden's transition team for trade issues.
However, actual Treasury data may differ and it has some discretion in applying the label, and extenuating circumstances, such as the coronavirus pandemic, may influence its decisions.