He specifically promised to call China out for being a «currency manipulator. » It’s a fancy way of saying China is cheating on trade by making its currency, the yuan, super cheap. That, in turn, makes Chinese stuff sell at a deeper discount in the U. S.
Many business and diplomatic leaders are relieved Trump backed off on this. Having the U. S. and China — the world’s top two economies — start a trade war would likely rattle markets.
«It would be a concern if things became very contentious right off the bat,» says Ethan Harris, global economist at Bank of America Merrill Lynch.
Here’s the other issue: China doesn’t deserve the currency manipulator label anymore. Experts across the political spectrum agree on this. China is actually trying hard to make the yuan more expensive these days. It has spent over $800 billion in the past to years to try to prop up the yuan.
«There does not seem to be any basis at the moment for accusing China of currency manipulation,» says former U. S. Ambassador to China J. Stapleton Roy.
If anything, Trump gave China a gift on his first working day when he formally withdrew the U. S. from the Asian trade deal known as TPP. It opens the door for China to take the lead on a big trade deal with other Asian nations.
Related: Trump’s decision to kill TPP leaves door open for China
What the Trump team is saying now
So has the Trump team changed its mind? It’s possible, but a more likely scenario is that the Trump team is wrapping China’s currency into a lengthy list of trade and security issues it wants to address with China.
«I would talk to them first» before doing anything, Trump told the Wall Street Journal in an interview before he took office.
