and retaliation, and will inflict further damage on an already wounded relationship between China and the U.S."

During the 2016 presidential campaign, Trump had accused China of manipulating its currency to gain trade advantages against the United States and had promised to brand China a currency manipulator as soon as he took office.

However, Trump's Treasury Department, which issues a report on currency manipulation every six months, has issued five reports since Trump took office, the most recent in May, in which Treasury said China did not meet the criteria to be labeled a currency manipulator.

The Treasury announcement, which came late Monday after the U.S. stock market had suffered its worst day this year, provided few details on the reasons for the abrupt change.

The statement did say that China's explanationsfor its recent currency moves were implausible and "confirm that the purpose of China's currency devaluation is to gain unfair competitive advantage in international trade."

China's central bank sets the exchange rate each morning and allows the yuan to fluctuate by 2% against the dollar during the day. The central bank can buy or sell currency — or order commercial banks to do so — to dampen price movements.

Because the Chinese government sets the exchange rate, said Joseph Gagnon, senior fellow at the Peterson Institute for International Economics, the Trump administration views China's currency policy this way: "Any move is a move they want. Therefore, a move down is a manipulation."

China's central bank blamed the yuan's drop on "trade protectionism" — an apparent reference to Trump's threat last Thursday