CHINA is unlikely to face serious consequences from the Trump administration’s decision to label it a “currency manipulator” given the apparent lack of Group of Seven (G7) and the International Monetary Fund (IMF) support for the move, former and current U.S. and G7 officials said.

The U.S. Treasury last Monday put the designation on China for the first time since 1994, roiling financial markets and escalating a bitter tit-for-tat tariff spat between the world’s two largest economies.

An accord agreed to by G7 of the world’s most advanced economies in 2013 says that members should consult each other before taking major currency actions.

But former and current officials said the U.S. Treasury failed to make those consultations, contradicting White House economic adviser Larry Kudlow’s claim that G7 members were on board.

European countries were astonished by the lack of coordination, one senior official of a European G7 country said, asking not to be named.

The day after the announcement, German Finance Minister Olaf Scholz warned against stoking tensions at a time when trade conflicts were already hindering growth.

Last Monday’s designation came just hours after U.S. President Donald Trump tweeted that China was “manipulating” its currency following a drop in the yuan below 7 to the dollar, which itself occurred a few days after Trump said he would impose a 10 percent tariff on US$300 billion worth of Chinese goods.

The announcement came as a surprise to many at the White House, especially since U.S. Treasury did not classify China as a manipulator in its latest semi-annual currency report in May, a source said.

Under a 1988 U.S. currency law, the main purpose of the designation is to force negotiations with the offending country to eliminate any unfair advantage. If no solution can be found, the president can impose penalties.

China denies that it has manipulated the yuan for competitive gain.

On Friday, the head of IMF’s China department, James Daniel, stood by the fund’s assessment last month in a report on currencies and trade balances that the value of China’s yuan was broadly in line with economic fundamentals.

Prominent economists, including former IMF chief economist Maurice Obstfeld and former Treasury Secretary Larry Summers, say there is no evidence to support the move. (SD-Agencies)