Just one day after U.S Treasury Secretary Steven Mnuchin’s comment welcoming a weak dollar, Mnuchin said the Trump administration was looking for trade war yet will defend the country’s best economic interests.
Mnuchin later down played his comment that a weaker dollar was “good for us as it relates to trade and opportunities”, saying they had been “balanced and consistent”.
“I thought my comment on the dollar was actually quite clear yesterday,” Mnuchin told reporters. “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.”
“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.”
A stronger euro, hanging around a three-year high against the dollar, may negatively impact the European economy by making its exports far less competitive. It also places the European Central Bank’s departure from years of ultra-loose monetary policy in jeopardy.
“We want currency levels to reflect economic fundamentals,” said French Finance Minister Bruno Le Maire. “We hope that it remains the common position because it is the responsible position from an economic point of view.”
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His Italian counterpart Pier Carlo Padoan stated that Mnuchin’s comments prompted him to think of an American policy from the 70’s and conveyed his concerns of 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 in an interview.
The British Chancellor of the Exchequer Philip Hammond, on a panel with Mnuchin, had stated that sterling, which plunged in 2016 following the Brexit vote, has been increasing in value. Hammond looked to Mnuchin and said: “And we seem to be recovering quite a bit more, Steve, thanks very much.”