Background

In its first semi-annual foreign exchange rate report under the Biden administration, the Treasury Department removed its previous listing of Vietnam as a currency manipulator and did not name any other trading partners as such either. The finding could lower chances that the U.S. will impose new tariffs, quotas, or other restrictions on imports from Vietnam as part of an ongoing Section 301 investigation of Vietnam’s acts, policies, and practices related to currency valuation.

As in its previous report, Treasury found that both Vietnam and Switzerland have (1) a significant bilateral trade surplus with the U.S. (i.e., greater than $20 billion), (2) a material current account surplus (i.e., at least two percent of the country’s gross domestic product), and (3) engaged in persistent one-sided intervention in the foreign exchange market (i.e., conducted repeated net purchases of foreign currency that amount to at least two percent of its GDP over the year). Treasury has newly determined that Taiwan met all three of these criteria as well.

However, Treasury has found that for the four quarters ending in 2020 there is insufficient evidence that any of these countries (or any others) manipulated its exchange rate for purposes of preventing effective balance of payments adjustments and gaining unfair competitive advantage in international trade.

Treasury is maintaining China, Japan, Korea, Germany, Italy, India, Malaysia, Singapore, and Thailand on a list of countries targeted for close scrutiny of their currency practices and adding Ireland and Mexico to that list. Each of these countries except China met two of the three criteria listed above, while China met only one but “constitutes a disproportionate share of the overall U.S. trade deficit.”

For more information, please contact Nicole Bivens Collinson (at (202) 730-4956 or via email) or Kristen Smith (at (202) 730-4965 or via email).

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