Only a day after it sent the dollar reeling, supporting a weak U.S. currency, Steven Mnuchin, the U.S. Treasury Secretary said that although Trump is not seeking a trade war he would defend America’s economic interests.
Mnuchin during a news conference at the World Economic Forum in Davos said on Wednesday that “a weaker dollar was good for us as it relates to trade and opportunities.”
According to The Hill, his remarks were seen by markets as departing from traditional U.S. currency policy and elicited thinly veiled warnings from European finance ministers, as U.S. President Donald Trump arrived in Davos to promote his “America First” agenda.
“I thought my comment on the dollar was actually quite clear yesterday, I thought it was actually balanced and consistent with what I’ve said before, which is, we are not concerned with where the dollar is in the short term,” Mnuchin said to the reporters.
Mnuchin added that “both advantages and disadvantages of where the dollar is in the short-term” stressing out that Washington wants fair economic competition.
“We want free and fair and reciprocal trade. So I think it’s very clear. We’re not looking to get into trade wars. On the other hand, we are looking to defend America’s interests.”
Reuters reports that the finance ministers of France and Italy expressed concerns about Mnuchin’s remarks, which pushed the dollar down to multi-year lows. A stronger euro, hovering at a three-year peak against the dollar, could hurt the European economy by making its exports less competitive. It also risks complicating the European Central Bank’s exit from years of the ultra-loose monetary policy.
Meanwhile Italian Secretary of Treasury Pier Carlo Padoan commented that Mnuchin’s remarks remind him of 1970s American policy and expressed deep concern about a trade war.
“I hope not. But history tells us that if there is a move which impacts trade towards more protectionism in one country then the temptation for the other partner to do the same or to retaliate is very high and increases, so things may get out of hand,” Padoan said.
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