Treasury Clears All US Trading Partners of Currency Manipulation

No Manipulation Found in Latest Review

Washington has concluded that no major US trading partner engaged in currency manipulation to secure unfair trade advantages during 2025, the Treasury Department announced Thursday. The finding follows a semi-annual review conducted under the Omnibus Trade and Competitiveness Act of 1988, which assesses exchange rate policies across America's largest commercial partners.

Despite the clean bill of health, ten economies remain subject to enhanced monitoring. The list includes seven Asian markets - China, Japan, South Korea, Taiwan, Thailand, Singapore, and Vietnam - alongside three European jurisdictions: Germany, Ireland, and Switzerland. All ten appeared on the January 2026 monitoring roster and continue to warrant closer scrutiny of their foreign exchange practices and broader macroeconomic policies.

Threshold Criteria and Regional Patterns

The Trade Facilitation and Trade Enforcement Act of 2015 establishes three benchmarks for placement on the monitoring list: maintaining a significant bilateral trade surplus with the United States, running a material current account surplus, and conducting persistent one-sided intervention in currency markets. Economies meeting two of these criteria trigger enhanced analysis.

In the current review period, Thailand, Singapore, and Switzerland each satisfied only one criterion. The Treasury noted these three will exit the monitoring list if they continue to meet fewer than two thresholds in the next assessment cycle.

The composition of the watch list reflects Asia's dominant position in US trade flows and the region's history of active foreign exchange management. China and Japan, America's largest Asian trading partners, have faced particular attention over currency practices for more than a decade. Vietnam's inclusion underscores Washington's focus on Southeast Asian manufacturing hubs that have absorbed production capacity relocating from China.

Expanding Scope Beyond Traditional Intervention

The Treasury's monitoring framework has evolved significantly since January 2026. Historically, the semi-annual exercise concentrated on whether governments were intervening to prevent their currencies from strengthening against the dollar - a tactic that keeps exports competitively priced in US markets.

The expanded approach now tracks whether economies managing exchange rate volatility resist depreciation with the same intensity they apply to appreciation pressure. This shift acknowledges that currency policy operates in both directions and that smoothing mechanisms can influence trade dynamics regardless of the direction of intervention.

The broader lens matters particularly for Asian economies that maintain managed float regimes or currency bands. Central banks across the region routinely participate in foreign exchange markets to dampen volatility, citing financial stability rather than trade competitiveness as the primary objective. Washington's revised framework subjects these operations to closer examination, even when they involve supporting rather than suppressing currency values.

Regional Implications for Policy Coordination

The continued presence of multiple Asian economies on the monitoring list creates a delicate backdrop for regional policy coordination. Singapore, operating one of Asia's most transparent monetary policy frameworks, bases its entire monetary stance on managing the trade-weighted exchange rate within an undisclosed band. Thailand's central bank has likewise intervened periodically to limit baht volatility amid shifting capital flows.

For China, the monitoring designation carries particular weight given ongoing US concerns about market access and trade imbalances. Beijing has gradually liberalized its exchange rate regime over the past decade, yet the renminbi remains subject to daily reference rates set by the People's Bank of China, and capital controls limit cross-border flows.

Japan and South Korea face different pressures. Both have seen their currencies weaken substantially against the dollar over the past two years as the Federal Reserve tightened monetary policy faster than the Bank of Japan or Bank of Korea. Tokyo's occasional intervention to support the yen - the opposite of traditional manipulation concerns - now falls within Treasury's expanded monitoring scope.

The European economies on the list present distinct dynamics. Germany and Ireland run large current account surpluses, though neither controls its own currency; the euro floats freely in global markets. Switzerland's presence reflects its traditional role as a safe haven and the Swiss National Bank's history of intervening to cap franc appreciation during periods of global uncertainty.

What Comes Next

The Treasury will release its next currency report in early 2027, covering the second half of 2026. Economies currently meeting only one criterion face potential removal if their trade and intervention patterns hold steady. Conversely, any partner meeting all three thresholds would trigger intensive bilateral engagement and potential consequences under US trade law, though no economy has crossed that line in recent years.

The absence of formal manipulation findings continues a pattern stretching back over a decade, even as the monitoring list has expanded and contracted with changes in global trade flows and currency market dynamics. Washington's challenge remains balancing legitimate concerns about competitive devaluation against the reality that many trading partners manage exchange rates primarily for domestic financial stability rather than export advantage.