The US Treasury Department on Monday labelled China a currency manipulator, escalating the U.S.-China trade war.
Treasury Secretary Steven Mnuchin designated China a currency-manipulating country a day after the nation’s central bank allowed the Chinese yuan to fall to a new low against the U.S. dollar and trigger the biggest slump this year of US stocks.
“Secretary Mnuchin, under the auspices of President Trump, has today determined that China is a Currency Manipulator,” the department said in a statement.
“As a result of this determination, Secretary Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions.”
The devaluation of the yuan reduces the relative price for Chinese goods purchased abroad, making U.S. products comparatively more expensive for foreign buyers.
The People’s Bank of China (PBOC) typically holds the yuan within a certain stabilizing range, though the nation has long been accused of devaluing its currency to gain an edge in trade.
Trump had long promised to label China a currency manipulator, which opens the country to potential international penalties.
And on Monday, he accused Beijing again of devaluing its currency to gain an unfair edge in trade after the yuan-to-dollar exchange rate fell to a low of 7 to 1. The move was widely seen as a response to new U.S. tariffs on Chinese goods slated to go into effect on September 1.
Trump expressed rage on Twitter: “China dropped the price of their currency to an almost a historic low. It’s called “currency manipulation.” Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!
Based on the historic currency manipulation by China, it is now even more obvious to everyone that Americans are not paying for the Tariffs – they are being paid for compliments of China, and the U.S. is taking in tens of Billions of Dollars! China has always used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices. Not anymore!”