By Gram Slattery

WASHINGTON (Reuters) – A top trade adviser to President-elect Donald Trump told Reuters on Thursday that the new administration would not look “favorably” on any attempt by China to manipulate its currency, responding to a Reuters report that the Authorities are considering allowing the yuan to weaken next year.

Peter Navarro, Trump’s new senior adviser on trade and manufacturing, said the White House would not interfere in the Treasury Department’s biannual review of whether foreign trade partners are manipulating their currencies.

However, he added: “I don’t think the Trump Treasury would be very welcoming of Chinese currency manipulation. China’s history as a currency manipulator is well known.”

The Chinese embassy in Washington sought comment, saying Navarro’s statements had “no factual basis” and that the country was not a currency manipulator.

“As a responsible major country, China has reiterated on many occasions that it will not engage in competitive currency devaluation,” the embassy said.

The Trump administration labeled China a currency manipulator in 2019. This was the first time the US government made this decision since 1994. The decision was revoked the following year.

The move is more symbolic than substantive, but would still signal that Trump is ready to engage in an unprecedented trade war with China, the world’s second-largest economy, as he frequently threatened during the campaign.

The Treasury Department’s decision in 2019 followed a period in which the Chinese government allowed the value of its currency to fall against the dollar.

On Wednesday, Reuters reported that China’s top leaders and policymakers are considering allowing the yuan to weaken in 2025 as they brace for higher U.S. trade tariffs when Trump returns to the White House next month.

The planned move reflects China’s recognition that it needs stronger economic stimulus to counter Trump’s threats of punitive trade measures, Reuters reported. Trump has announced plans to impose a 10% universal import tariff and a 60% tariff on Chinese imports into the United States.

Navarro, who also served as an economic adviser during Trump’s first term, said Trump could choose to raise tariffs even further if China weakens its currency rather than waiting for the semi-annual financial report.

“There are appropriate remedies,” Navarro said. “If (Trump) didn’t want to wait for a report, he could just increase tariffs.”

(Reporting by Gram Slattery in Washington, additional reporting by Michael Martina, editing by Ross Colvin, Matthew Lewis and Frances Kerry)