Oh, to be a fly on the wall in the Mar-a-Lago dining room this week. Better yet, to be a fly that speaks Mandarin.
President Donald Trump is scheduled to host Chinese President Xi Jinping and his entourage at Trump’s Mar-a-Lago property this Thursday and Friday. To say the first face-to-face meeting between the two world leaders will be awkward is a major understatement.
Trump has already tweeted that the meeting “will be a very difficult one” after using even harsher words to describe China on last year’s campaign trail: The then-candidate invoked the word “rape” in describing China’s trade policies, threatened to impose a 45% tariff on Chinese imports, and pledged to formally label the country a currency manipulator on day one.
Trump has yet to make that manipulator label stick, and it’s probably for the best. Here are the key reasons why economists and investors don’t think he should follow through on that particular campaign promise.
1. It’s more than just a label
“Currency manipulator” amounts to more than mere words. It’s an official designation determined by the U.S. Treasury Department, and if the Trump administration choses to invoke this status, it would likely happen when the department releases its next semi-annual report on exchange rate policies. Over the last few years, these reports have been released in April and October.
Labeling a country as a currency manipulator triggers a formal process in which the Secretary of the Treasury engages in a series of negotiations with China. If after a year, the U.S. continues to assess that China is a currency manipulator, President Trump could…
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