Currency manipulation

Trump blasts China yuan drop as 'currency manipulation'

By DOUG PALMER

President Donald Trump on Monday blasted the recent drop in the value of China's yuan as "currency manipulation" and continued his push on the Federal Reserve to further cut interest rates to weaken the U.S. dollar.

"China dropped the price of their currency to an almost a historic low," Trump wrote on Twitter after the yuan fell below $7 for the first time in a decade. "It’s called 'currency manipulation.' Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!"

Meanwhile, Bloomberg News reported on Monday that Beijing has asked its state-owned companies to suspend purchases of U.S. farm products.

Such a move would only further irritate Trump, who publicly declared after a meeting with Chinese President Xi Jinping in late June that China would immediately be making major purchases of U.S. farm goods. But Beijing hasn't followed through.

With the tweet, Trump lashed out at two of his favorite targets at the same time: China and the Federal Reserve.

Trump recently announced he would be setting a 10 percent tariff on another $300 billion worth of Chinese goods after earlier imposing a 25 percent tax on $250 billion worth of Chinese imports.

He's also been heaping pressure on the Federal Reserve to cut interest rates to boost the U.S. economy. Last week, the Fed cut its key interest rate by a quarter of a percentage point, citing the uncertainty caused by Trump's trade policies as one reason for the move. Lower interest tends to drive down the value of the dollar.

White House trade adviser Peter Navarro, in a "Fox News Sunday" interview Sunday, expressed frustration over a 10 percent decline in the value of the yuan since Trump started imposing tariffs on China over a year ago.

At the same time, Navarro also argued the drop in value of the currency means American consumers will not see major price increases on goods coming from China when the new 10 percent tariff goes into effect on Sep. 1.

"We're talking about putting 10 percent tariffs on a remaining $300 billion of goods," he said. "We're just getting back to where we were before China started manipulating the currency."

Despite Trump's decision to impose more duties, the administration still plans to host Chinese officials in Washington in early September for another round of trade talks.

For the two sides to reach a deal and for Trump to eliminate the tariffs he's already imposed, China must stop its "seven deadly sins," including currency manipulation and other practices such as providing huge subsidies for its state-owned enterprises and forcing American companies to transfer their technology, Navarro said.

During the 2016 presidential campaign, Trump promised to formally label China as a currency manipulator on his first day in office. But he declined to do that, reflecting the prevailing view at the time that Beijing was not devaluing its currency for an unfair trade advantage.

Since then, the Treasury Department has kept China on a currency watch list in five semi-annual reports issued under the Trump administration, but has not formally labeled it a currency manipulator. The next report is due on Oct. 15.