Treasury labels Switzerland, Vietnam currency manipulators

The Treasury Department on Wednesday labeled Switzerland and Vietnam as currency manipulators, applying the designation to the two countries for the first time.

The announcement sparks a new clash with the two trading partners and will require them to negotiate with both the U.S. and the International Monetary Fund to address the claims.

The Trump administration previously also labeled China as a currency manipulator in 2019 as Washington and Beijing negotiated a trade deal. 

“The Treasury Department has taken a strong step today to safeguard economic growth and opportunity for American workers and businesses,” Treasury Secretary Steven Mnuchin said in a statement. “Treasury will follow up on its findings with respect to Vietnam and Switzerland to work toward eliminating practices that create unfair advantages for foreign competitors.” 

The designation of Vietnam as a currency manipulator comes months after the Trump administration opened a probe into the country’s trade practices on claims it undervalued its currency. The Treasury Department also cited undervalued currency in new tariffs against Vietnamese tires it levied last month.

Vietnam is the 13th largest U.S. trading partner, according to the United States trade representative.

In a report, the department specifically accused Vietnam of conducting “large-scale and protracted intervention, much more than in previous periods, to prevent appreciation of the dong,” the country’s currency.

The report also made similar accusations against Switzerland, saying it “conducted large-scale one-sided intervention, significantly larger than in previous periods, to resist appreciation of the franc and reduce risks of deflation.” 

Should ensuing negotiations over the labels between the U.S. and the two countries falter, Washington could choose to impose various punishments, including tariffs.

The decision to label other countries as currency manipulators is based on an array of factors, including a country’s bilateral trade surplus with the United States and its foreign currency interventions.

President Trump has taken a tough stance on foreign nations’ trade relationships with the U.S., accusing allies and foes alike of taking advantage of Washington with what he says are unfair trade practices.

However, the currency report is anticipated to be the last one of the current administration, and it will be up to the next Treasury secretary to decide whether to still apply the labels to Switzerland and Vietnam.