The US government is said to be considering proposing tariffs on goods from those countries it deems to have undervalued their currencies in order to get the upper hand when exporting to the US. The idea of countries manipulating their currencies is nothing new, Trump has long accused China of such things, in a roundabout way, however, his administration has been looking at how to take a more aggressive approach to the situation. The US Commerce Department said its proposed rule change would amend the normal countervailing duty process to include new criteria for currency undervaluation.
The proposal would let companies based in the US seek anti-subsidy tariffs on exports from countries that the US Treasury Department believes is engaging in competitive devaluation of their currencies.
The idea is said to be the brainchild of Wilbur Ross, the Commerce Secretary and Peter Navarro, White House trade adviser, who have both been pushing for the inclusion of the currency tool since the early days of Donald Trump’s presidency. Although that is not to say others have not had concerns about currency manipulations for a number of years. In 2010 the now US trade representative, Robert Lighthizer, told a congressional commission ‘We should respond to China’s currency manipulation’, adding ‘The US government should treat currency manipulation as a subsidy’.
As well as China, the new rule could also put exports at risk from a number of other countries, including Germany, South Korea, India, Switzerland and Japan. These counties were all on the ‘monitoring list’ of the Treasury Department’s semi-annual currency report, which tracks amongst other things high bilateral trade surpluses, high global current account surpluses and currency market interventions.
Ross said: ‘This change puts foreign exporters on notice that the Department of Commerce can countervail currency subsidies that harm U.S. industries’, adding ‘Foreign nations would no longer be able to use currency policies to the disadvantage of American workers and businesses’.