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Trade wars to become currency wars in 2021

On the way out the door, the tough-on-Asia Donald Trump administration finally netted a cagey and elusive rival: Vietnam.

After four years of rage tweeting about an “undervalued” Chinese yuan that’s “killing us,” Trump’s Treasury Department opted to put the Vietnamese dong on its dreaded currency manipulators list instead. Xi Jinping’s China got a last-minute reprieve in a new US Treasury report.

No one knows what’s in Treasury Secretary Steven Mnuchin’s head. One possibility: with the dollar down 6.5% versus the yuan this year and the Federal Reserve stimulating like crazy, China could simply – and credibly – retort that it’s Trump who’s trying to devalue his way to recovery.

Though Switzerland, oddly, joined Vietnam formally as a manipulator, Washington’s sense of where the biggest challenges lie is clearly Asia. In addition to the Treasury’s currency manipulator’s list, countries on its longer watch list include China, India, Japan, South Korea, Taiwan and Thailand.