Call it twofold projection by the US Treasury.

Bloomberg reports that the Trump administration will expand the number of countries it scrutinizes for currency manipulation in an upcoming report, citing "people familiar with the matter." Yet even after lowering the bar for foreign governments to come under scrutiny, such usual suspects as China, Japan, Switzerland, and Korea will escape scrutiny, and instead Steven Mnuchin's treasury will project the US government's impotence in calling a spade a spade, and will accuse a lightweight of manipulating its currency instead.

According to the report, so far the Treasury has examined its 12 largest trade partners and Switzerland. An expanded watch list could include Russia, Thailand, Indonesia, Vietnam, Ireland or Malaysia, all of which have large trade surpluses with the U.S.

Perhaps in order to provide comedic relief, Bloomberg reports that Vietnam may be named a manipulator outright for artificially holding down its currency - which as Zero Hedge readers know well - is called the dong, as it met all three criteria the Treasury Department uses to test for currency interventions (in a world in which every central bank manipulates its currency, these criteria are likely not being named China, Japan, which is buying almost every single Japanese ETF it can find to crush the yen, or Switzerland, which is aggressively buying Apple stock to continue to devalue the franc).

Internal debate is continuing over the issue and the administration has asked Vietnam to disclose more information before it releases the report.

While we do not know what specific criteria is used, we do note that the Dong has been materially limp relative to the excited surge in positivity that has seen Vietnam's CDS spread collapse.

Of course, since this is all projection in every sense of the word, the label has no practical effect, other than requiring the U.S. to engage in negotiations with offending countries, but is likely to have market repercussions for any government named a manipulator. Although, since their goal is to weaken the currency, this may just make their lives easier.

The U.S. has not labeled a major trade partner a currency manipulator since 1994.