Steve Mnuchin took a punchy position on trade policy yesterday as the US Treasury secretary welcomed the prospect of a weak dollar as being good news for American businesses.
In market-moving comments that sent the dollar to a three-year low against a basket of currencies, Mr Mnuchin told a news conference at Davos that the recent decline of the US currency was beneficial to American “trade and opportunities”.
“The dollar is one of the most liquid markets. Where it is in the short term is not a concern for us at all,” Mr Mnuchin said in comments that also broke the mould, as it is not customary for top American politicians to talk down the value of their own currency.
The dollar fell almost 1 per cent against a basket of currencies to about 89.32. It has lost about 2.5 per cent of its value so far in January.
It came as the United States used the Davos summit of the World Economic Forum to launch a big investment drive. “This is about an ‘America first’ agenda, but ‘America first’ does mean working with the rest of the world,” Mr Mnuchin said. “It just means that President Trump is looking out for American workers and American interests, no different than he expects other leaders will be looking out for their own. Economic growth in America is not just good for the US but for the rest of the world.”
Advertisement
Mr Mnuchin said that President Trump’s landmark corporation tax cuts would bring “literally trillions of dollars” back to the US as companies like Apple invested and repatriated their savings.
Replying to questions about whether the US would rejoin the Trans-Pacific Partnership after a deal was struck on Tuesday between Canada, Japan, Singapore, Australia and others, he said that “it’s definitely not off the table”, although he added: “We are fans of bi-lateral trading agreements.” America pulled out of the Trans-Pacific Partnership in one of the first acts of Mr Trump’s administration.
At the same time yesterday, Wilbur Ross, the US commerce secretary, said that America was engaged in a trade war with countries such as China.
Mr Ross defended America’s decision this week to impose tariffs of up to 50 per cent on Chinese solar panels and washing machines and warned that actions on steel, aluminium and intellectual property rights were pending.
“What has provoked a lot of the trade actions is inappropriate behaviour on the part of our trading counterparties,” Mr Ross said. “Many countries are very good at the rhetoric of free trade, but in fact actually practice extreme protectionism. That’s a problem the president is quite determined to heal.”
Advertisement
His comments were a barely disguised attack on President Xi’s speech at Davos last year, where China’s leader took a veiled swipe at Mr Trump’s populist election campaign and claimed that China was prepared to usurp America as the world’s champion of free trade. “No one will emerge as a winner in a trade war,” he said last year.
Mr Ross hit back defiantly at a press conference ahead of President Trump’s keynote speech on Friday. “Trade wars are fought every single day,” he said. “Every single day, there’s somebody trying to sell more product and unfortunately every single day there are also various parties violating the rules and trying to take unfair advantage.
“So the trade war has been in place for quite a little while. The difference is the US troops are now coming to the ramparts.”
He acknowledged that China could retaliate, but said that America was prepared.
