WASHINGTON--The Trump administration labeled Switzerland and Vietnam currency manipulators on Wednesday, in another parting shot at trading partners that could complicate matters for U.S. President-elect Joe Biden's incoming team.
In a long-overdue report, the U.S. Treasury also added India, Thailand and Taiwan to a list of countries it says may be deliberately devaluing their currencies against the dollar.
The COVID-19 pandemic has skewed trade flows and widened U.S. deficits with trading partners, an irritant to outgoing President Donald Trump, who won office four years ago partly on a promise to close the U.S. trade gap.
The Swiss National Bank said it does not manipulate its currency and "remains willing to intervene more strongly in the foreign exchange market." Vietnam's trade ministry declined to comment.
The manipulator labels will ramp up pressure on Biden before he takes over, Per Hammered, chief emerging markets strategist at SEB in Stockholm, said. "You set the agenda and force him (Biden) into positions that he will have to get out of somehow," Hammered said.
A U.S. Treasury official said Biden's transition team had not been briefed, adding: "They are not implicated in this."
U.S. Treasury Secretary nominee Janet Yellen could alter the findings in her first currency report, which is due in April. A spokesman for Biden's team did not respond to a request for comment.
The President-elect's team has been critical of other moves by U.S. Treasury Secretary Steven Mnuchin, including ending some Federal Reserve pandemic lending programmes. Mnuchin said in a statement that the Treasury "has taken a strong step today to safeguard economic growth and opportunity for American workers and businesses."
China, labelled by Mnuchin as a currency manipulator in August 2019 at the height of trade tensions, was kept on the Treasury's monitoring list due to its high trade surplus with the United States. Mnuchin lifted the designation in January, two days before the world's two largest economies signed a "Phase 1" trade deal.
Countries must at least have a $20 billion-plus bilateral trade surplus with the United States, foreign currency intervention exceeding 2% of gross domestic product and a global current account surplus exceeding 2% of GDP to be labelled a manipulator. Vietnam and Switzerland far exceeded these criteria, with foreign exchange interventions of 5% and 14% of GDP respectively
The report said that at least part of Vietnam's intervention was aimed at pushing down the dong for a trade advantage, while at least part of Switzerland's action was aimed at pushing down the Swiss franc to prevent effective balance of payments adjustments. The Treasury said Switzerland's foreign exchange intervention totaled 14% of GDP.
