The U.S. Department of the Treasury has delivered to Congress its semiannual assessment of the economic policies of the United States' major trading partners.
Treasury announced June 16 that Congress has received its report Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States. "In this Report, Treasury reviewed and assessed the policies of major U.S. trading partners, comprising roughly 80 percent of U.S. foreign trade in goods and services, during the four quarters through December 2022," the agency states in the announcement.
In accordance with the Omnibus Trade and Competitiveness Act of 1988, the report studied the practices of the U.S.' major trading partners and concluded that over the course of the four quarters ending in December 2022, no significant trading partner engaged in manipulation of the exchange rate between its currency and the dollar "for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade during the four quarters through December 2022."
Although Treasury determined no major trading partner met the three criteria under theTrade Facilitation and Trade Enforcement Act of 2015 that would trigger "enhanced analysis" by Treasury, seven economies are on the department's "Monitoring List," the news release states. The partners that "merit close attention" for their currency and macroeconomic practices are China, Korea, Germany, Malaysia, Singapore, Switzerland and Taiwan, the news release reports.
Switzerland exceeded one of the three criteria during the timeframe of the recent analysis, according to the release, after having previously exceeded all three criteria for "enhanced analysis" under the 2015 act.
"Though Switzerland no longer meets all three criteria for enhanced analysis, Treasury will continue to conduct an in-depth analysis of Switzerland until it does not meet all three criteria under the 2015 Act for at least two consecutive Reports," the news release states. Treasury will continue to discuss with the government of Switzerland options it can adopt to address "the underlying causes of its external imbalances."
Treasury's report also emphasized the department's demand for increased transparency from China, which "stands out among other large economies due to its reluctance to disclose foreign exchange intervention and general lack of openness about important aspects of its exchange rate mechanism, which justifies Treasury's attentive monitoring," the release reports.
Treasury Sec. Janet Yellen said in the report that although the world economy has "proven to be more resilient than many predicted" in its previous report, Russia's illegal war on Ukraine has depressed the global economic outlook and increased food and energy insecurity. Varying predictions on growth and inflation have created a range of economic policies and actions around the world, she said, which, when combined with other measures, have heavily impacted currencies.
"Most foreign exchange intervention by U.S. trading partners last year was in the form of selling dollars, actions that served to strengthen their currencies," Yellen said in the report. "However, Treasury remains vigilant to countries’ currency practices and policy settings and their consistency with strong sustainable and balanced global growth."
