In this file:
· CPA Praises Trump Administration for Labeling China a ‘Currency Manipulator’
· Treasury Dept. designates China a ‘currency manipulator,’ a major escalation of the trade war
CPA Praises Trump Administration for Labeling China a ‘Currency Manipulator’
Currency designation will initiate consultations on trade barriers
Source: Coalition for a Prosperous America
Aug 6, 2019
Washington. The Coalition for a Prosperous America (CPA) today strongly praised the Trump administration for formally designating China as a “currency manipulator.” US manufacturers have long complained about Beijing’s currency manipulation, which has made Chinese exports artificially cheap in the US market. This is the first time that the executive branch has taken such action.
“This is tremendous news, and long overdue," said CPA chair Dan DiMicco. “For 25 years, Beijing has deliberately undervalued its currency to gain a major export advantage over US producers. And America’s manufacturers have paid the price. But Washington is finally paying attention. We commend the president and his team for taking this much-needed step.”
Starting in 1994, China began to peg its currency, the yuan, to the dollar at an artificially low rate. Since that time, the US goods trade deficit with China has grown exponentially. Last year it clocked $419 billion, roughly half of America’s global goods trade deficit.
The new designation as a currency manipulator will allow for consultations between the US Treasury Department and the International Monetary Fund (IMF) regarding China’s unfair competition.
Michael Stumo, CEO of the CPA, said, “Currency misalignment caused by an overvalued and noncompetitive dollar is the primary reason for continuing US trade deficits. It has cost America millions of manufacturing jobs in the past two decades and has driven down agricultural prices. The People’s Bank of China recently raised the yuan’s trading range above 7 to 1 against the dollar. This continuing manipulation simply pushes the dollar higher in relation to the yuan. President Trump should now use his authority to counter-intervene against the People’s Bank, and he should start managing the capital inflows that continually drive the dollar higher. He should also put the full force of his administration behind the passage of the Competitive Dollar for Jobs and Prosperity Act sponsored by Senators Tammy Baldwin and Josh Hawley.”
Last week, CPA strongly endorsed new legislation introduced by Sens. Tammy Baldwin (D-WI) and Josh Hawley (R-MO) that would require the Federal Reserve to achieve and maintain balanced trade for the United States through management of the US dollar’s exchange rate. CPA is also calling on the administration to provide more immediate relief for farmers and ranchers and a robust strategy to improve agricultural prices and incomes.
CPA has consistently urged policymakers to address the challenges posed by currency misalignment. Earlier this year, CPA researchers released a groundbreaking study on the impacts of a potential dollar revaluation. Adjusting the dollar downward by roughly 27 percent could yield an estimated $1 trillion in additional GDP and roughly 5 million new jobs over six years.
Read more about currency misalignment:
Melissa Tallman, Marketing and Communications Director
The Coalition for a Prosperous America is the nation's premier nonprofit organization working at the intersection of trade, jobs, tax and economic growth.
We are a bipartisan coalition working to eliminate the trade deficit, create good paying jobs and deliver broadly shared prosperity to America.
Treasury Dept. designates China a ‘currency manipulator,’ a major escalation of the trade war
By David J. Lynch, Gerry Shih, Jeff Stein and Damian Paletta, The Washington Post
August 5, 2019
The United States and China traded blows in an unrestrained economic conflict Monday that sent stock markets plunging and threatened to inflict significant damage on a weakening global economy.
Late in the day, Treasury Secretary Steven Mnuchin formally labeled China a “currency manipulator,” a largely symbolic slap at Beijing that is likely to deepen the growing animosity between the two trading partners.
The move, which President Trump had promised to take on his first day in office, requires Treasury only to initiate consultations with China. Beijing has long denied U.S. accusations that it keeps its currency undervalued to make its products more competitive on world markets.
Treasury’s announcement, shortly before 6 p.m., capped an unnerving 24 hours that began with China allowing its tightly controlled currency to slide to an 11-year low against the dollar and continued through a nearly 1,000-point drop in the Dow Jones industrial average.
“This is a big policy mistake. We get recession because of policy mistakes like this,” said Allen Sinai, chief economist and strategist at Decision Economics. “China did not actively drive its currency down. It was a market-driven move. Secretary Mnuchin’s comments are totally political.”
On Wall Street, the Dow closed down more than 767 points, or nearly 3 percent, and Treasury yields plunged to their lowest mark in almost three years as investors anticipated trouble ahead.
The financial meltdown followed China’s decision to answer Trump’s latest tariffs by allowing its currency to fall past a key benchmark of seven yuan per dollar for the first time since 2008.
The central bank, the People’s Bank of China, played down the significance of the milestone but linked the drop to the dispute with Washington...
more, including links