President Donald Trump on Monday accused Russia and China of devaluing their nation’s currencies, potentially ratcheting up trade tensions while also appearing to take a swipe at his own Federal Reserve.
"Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!” the president tweeted.
Trump's sweeping claim came after the U.S. avoided designating any of its major trading partners as currency manipulators in the Treasury Department’s semi-annual currency report, though it did denounce “the increasingly non-market direction of China’s economic development.”
But going back to his days on the campaign trail, Trump has repeatedly rebuked the Asian power for employing currency manipulation techniques and other inequitable means to gain an upper hand in global trade negotiations.
The president has rarely accused Russia, however, of similar economic scheming. Russia is also absent from an Obama-era list of countries the Treasury Department monitors for extra scrutiny that includes China, Japan, Germany, India, South Korea and Switzerland.
The White House earlier this month announced plans to hike tariffs by 25 percent on Chinese manufacturing imports and other products worth around $50 billion, citing decades of allegedly unfair trade practices.
The retaliatory tariffs China’s Commerce Ministry announced a day later included duties on the $14 billion worth of soybeans China imports from the U.S. each year. China remains the second-largest market for American agricultural exports.
Trump then intensified the conflict further when he asked the U.S. trade representative to consider additional tariffs on $100 billion in Chinese goods.
In January, Treasury Secretary Steve Mnuchin elicited criticism from economists and Wall Street when he advocated for a weaker U.S. dollar in hopes that it would bolster America’s trade advantages.
“Obviously, a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told reporters at the World Economic Forum in Davos, Switzerland. He added that recent declines in the value of the dollar against other currencies were “not a concern of ours at all.”
Trump has previously judged the dollar as “too strong,” making it more difficult for American companies to compete in the global marketplace. That assessment broke with decades of White House and Treasury Department policy of publicly supporting a strong dollar. Trump’s new National Economic Council director, Larry Kudlow, is a noted proponent of the strong dollar policy.
“If you look at periods of dollar weakness, especially the 1970s but also the 2000s, a sinking dollar is usually associated with rising inflation, higher interest rates and damage to the economy,” the top White House economic adviser wrote last year. “Under these circumstances, investors at home and abroad lose confidence and take their money elsewhere.”
Meanwhile, Trump has been vocal about his concerns regarding interest rate hikes, especially if the increases risk cutting into the economic benefits flowing from his deregulatory push and tax reform package.
Federal Reserve officials last month raised the benchmark federal-funds rate to a range between 1.5 percent and 1.75 percent, and said they expected to lift the rate another two or three times this year.