Trump’s trade adviser warns against currency manipulation as China considers weaker yuan

By Gram Slattery

WASHINGTON (Reuters) – A top trade adviser to President-elect Donald Trump told Reuters on Thursday that the new administration would not look “fondly” on any attempt by China to manipulate its currency, responding to a Reuters report that authorities there were considering allowing the yuan to weaken next year.

Peter Navarro, Trump’s incoming senior adviser on trade and manufacturing, said the White House would not interfere in the Treasury Department’s semiannual review of whether foreign trading partners are manipulating their currencies.

However, he added: “I don’t think Trump’s Treasury Department would welcome Chinese currency manipulation very much. China’s history as a currency manipulator is well known.”

The Chinese Embassy in Washington, reached for comment, said Navarro’s statements “have no factual basis” and that the nation is not a currency manipulator.

“As a responsible major country, China has reiterated on many occasions that it will not engage in competitive currency depreciation,” the embassy said.

The Trump administration labeled China a currency manipulator in 2019, the first time the US government had made that decision since 1994. The decision was revoked the following year.

The move is more symbolic than substantive, but will nonetheless signal that Trump is willing to engage in an unprecedented trade war with China, the world’s No. 2 economy, as he often threatened to do on the campaign trail.

The Finance Ministry’s decision in 2019 followed a period in which the Chinese government allowed the value of its currency to fall against the dollar.

On Wednesday, Reuters reported that China’s top leaders and policymakers are considering allowing the yuan to weaken in 2025 as they prepare for higher U.S. trade tariffs when Trump returns to the White House next month.

The intended move reflects China’s recognition that it needs greater economic stimulus to counter Trump’s threats of punitive trade measures, Reuters reported. Trump has said he plans to impose a 10% universal import tariff and a 60% tariff on Chinese imports into the US.

Navarro, who also served as an economic adviser during Trump’s first term, said Trump could choose to further escalate tariffs if China weakens its currency, rather than waiting for the semiannual fiscal report.

“There are appropriate funds there,” Navarro said. “If (Trump) didn’t want to wait for any report, he could just raise the rates higher.”

(Reporting by Gram Slattery in WashingtonAdditional reporting by Michael MartinaEditing by Ross Colvin, Matthew Lewis and Frances Kerry)