Trump, who on the campaign trail blamed China for "stealing" United States jobs and prosperity by cheapening its currency, repeatedly promised to label the country as a currency manipulator on "day one" of a Trump administration - a move that would require special negotiations and could lead to punitive duties and other action.
The report said Treasury would review the currency and other trade practices of the six nations named to the monitoring list and meet with finance officials from those nations to ensure progress in shrinking their trade imbalances with the United States. Although Beijing has allowed the yuan to slowly appreciate in recent years and actively fought depreciation recently, its past interventions "imposed significant and long-lasting hardship on American workers and companies".
President Donald Trump said on Wednesday that his administration will not label China a currency manipulator, backing away from a campaign promise, even as he said the U.S. dollar was "getting too strong" and would eventually hurt the economy.
However, the report did caution that six major United States trading partners warrant being placed on the monitoring list for special attention: China, Germany, Japan, Korea, Switzerland and Taiwan. Under US law, labeling a country as currency manipulator can trigger an investigation and negotiations on tariffs and trade.
The Treasury also warned that it will scrutinise China's trade and currency practices very closely. Its surplus with the United States totaled $65 billion a year ago.
But he said on Wednesday that he would refrain from that label, partly because he was working with China to rein in North Korea's threatening actions.
Trump did say he thought the dollar was "getting too strong" - a comment that sent the USA currency falling, though it subsequently rebounded.
"I think our dollar is getting too strong, and partially that's my fault because people have confidence in me", Trump told the Wall Street Journal. The dollar's strength in the past two years has been a drag on USA exports.
That was also a turnaround from his frequent criticism of Yellen during his campaign, when he said she was keeping interest rates too low.
The reversal on branding China a currency manipulator is among several changes in which Trump has softened tough stances he had taken during the campaign.