The U.S. Treasury released its semi-annual exchange rate report on Friday, and as signaled by President Trump it did not cite China (or any other country) as an exchange manipulator. There had been earlier speculation, and some concern, that Treasury would substantially rewrite the criteria to meet the President’s pre-election pledge, but the report plays it straight down the middle. No country meets all three existing criteria for manipulation of their exchange rate for competitive gain, though six countries—China, Germany, South Korea, Taiwan, Japan, and Switzerland—are placed on a watch list. At the same time, one can read in the report’s analysis a toughening of exchange rate policy, at least prospectively, in its calls for an ambitious set of reforms in the monitored countries, and its commitment to “aggressively and vigilantly monitoring and combating unfair currency practices”. On balance, the report reaffirms that, while trade and not exchange rates is likely to be the primary battleground for U.S. economic relations in the future, exchange rates remain a flash point.