Why Did Trump Flip on China Currency Promise?: QuickTake Q&A

As a candidate, President Donald Trump pledged to label China a currency manipulator "on day one" of his administration. That didn’t happen — and it’s unclear if it ever will. Days after hosting Chinese President Xi Jinping at his Mar-a-Lago resort in Florida, Trump said in an April 12 interview that he no longer wanted to label China a currency manipulator. He also declared the dollar was "getting too strong," touching off a decline in the currency and handing the U.S. a trade advantage. The president’s remarks upstaged Treasury Secretary Steven Mnuchin, whose first report to Congress on foreign-exchange markets is due in mid-April.

One reason could be that, judging by an October 2016 assessment by the U.S. Treasury in the waning days of the Barack Obama administration, China isn’t manipulating its currency anymore. A 2015 law set out three criteria, including whether a country has a disproportionate trade surplus with the U.S. and sizable purchases of foreign assets as a result of currency intervention. In Treasury’s October report, China met just one criterion — holding a large bilateral trade surplus with the U.S. Even then, the surplus is declining, not growing. Lately, China has been working to prop up, not weaken, its currency.