U.S.-China Trade Fight Increasingly Includes Currency

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

The last time the United States labeled China a currency manipulator was 1994. It looks like it might be preparing to do so again.

U.S. Treasury Secretary Steven Mnuchin, whose department is responsible for the biannual report (due out next week) that identifies currency distortions around the globe, didn’t flat out say so in an interview with the Financial Times, instead saying Treasury was “very carefully” monitoring the Chinese renminbi, which has fallen significantly during the past year.

But there has been speculation for some time that the Trump administration might take the plunge and place China on this list as part of the larger trade dispute between Washington and Beijing. And now other senior (and anonymous) Treasury officials are worrying about the trading value of the renminbi, too, before Secretary Mnuchin travels to a meeting of finance ministers in Indonesia.  

Naming China (or any other country) a currency manipulator via this report doesn’t immediately do anything. It doesn’t trigger sanctions, but it would require the administration to enter into direct talks with the country it accuses. And it would likely further chill relations between the Trump administration and Xi Jinping’s government in the context of the ongoing trade dispute.

While it’s hard to see how relations could get icier, currency manipulation is a big deal. By keeping a currency undervalued, a country can make its exports less expensive and imports more so. That has directly contributed to the yawning U.S. goods trade deficit with China in years past and has cost the United States a substantial number of jobs.

With that context in mind, codifying currency rules (or guidelines for acceptable monetary policy behavior) in trade agreements is emerging among some prominent economists as the best thing about the new NAFTA deal.

The currency chapter in the USMCA is unlikely to affect Mexico or Canada, as neither has been a currency manipulator and both run global current account deficits in any event. But it could become an important template for later deals with other countries.

“Later deals with other countries.” Like a deal with China?

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Reposted from AAM

Posted In: Allied Approaches, From Alliance for American Manufacturing

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From the AFL-CIO

On Tuesday, the labor movement drove historic wins for pro-worker candidates like Governor-Elect Andy Beshear in Kentucky and new legislative majorities in Virginia. Not only did union members come out to vote in droves, 270 union member candidates were elected to public office last night and counting. This adds to the total of more than 900 union members elected up and down the ballot in last year’s midterms, a product of the Union Member Candidate Program launched by the AFL-CIO just two years ago. The share of union members who won in the 2018 midterms is two-thirds. The program will continue through 2020 and beyond, electing even more union members to public office. 

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