Donald Trump's campaign pledge to label China a currency manipulator has taken a zig-zagging journey during his tenure in the Oval Office.
First, some background. A weaker yuan, relative to the U.S. dollar, means Chinese goods can be exported more cheaply to the United States, because each dollar in sales revenue translates to more yuan back home. A devalued Chinese currency, therefore blunts the impact of Trump's tariffs on imports from China.
A U.S. law allows the government to label a foreign country a currency manipulator. If it does, the department must engage with the International Monetary Fund to address China's exchange rate and produce a report about U.S. concerns.
Trump applied the label to China in a tweet on Aug. 5, 2019. In a subsequent Treasury Department statement, Secretary Steve Mnuchin said Chinese authorities, who have "ample control" over the country's money supply, have openly acknowledged their central bank's ability to manipulate China's currency.
It marked the first time since 1994 that the United States had applied the label to China, and it put Trump and high-profile Democrats such as Senate Minority Leader Chuck Schumer of New York on the same side of the issue.
At that point, this became a Promise Kept. But that wasn't the end of the story.
In January 2020, at a sensitive point in trade negotiations with China, the Trump administration rescinded that label.
The change came with the release of the report required under the August 2019 labeling. The report said that Chinese pledges and subsequent fluctuations in the exchange rate meant that the label could be lifted.
"China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability," Mnuchin said in a statement.
The administration did keep China on a less severe "monitoring list" of trading partners that merit close attention on currency issues, along with Germany, Ireland, Italy, Japan, Korea, Malaysia, Singapore, Vietnam and Switzerland.
Critics said Trump's rescinding of the label was shortsighted.
"China is a currency manipulator — that is a fact," Schumer said. "Unfortunately, President Trump would rather cave to (Chinese) President Xi than stay tough on China. When it comes to the president's stance on China, Americans are getting a lot of show and very little results."
Other experts, however, suggested that the rescinding made sense.
The original labeling was done "for political reasons," Chad P. Bown, an international trade expert at the Peterson Institute for International Economics in Washington, told the New York Times. "Clearly there was no legal basis or really an economic basis to do so."
Whether or not labeling China a currency manipulator was justified, the fact remains that Trump said as a candidate that he would do it. After he won, he did it, and then he undid it, seeking to use the rescinding as leverage in trade negotiations.
We rate this a Compromise.