US designates China ‘currency manipulator’ as trade war rages

Move follows historic lowering of yuan below seven to the dollar

WASHINGTON: The United States on Monday formally accused China of manipulating its currency, marking the second major escalation in the two countries’ spiralling trade war in just 24 hours.

Washington’s sudden move came the day China allowed the yuan to fall below seven to the dollar for the first time in about a decade - provoking US President Donald Trump’s ire and sending global markets diving into the red.

Wall Street on Monday posted its worst one-day losses of 2019 as hope of any near-term resolution to the year-long trade war between the world’s top two economies appeared to slide out of view. In a Twitter outburst earlier in the day, Trump had angrily accused Beijing of weakening the yuan “to steal our businesses and factories”.

Oil hovers around $60 as US-China trade tensions weigh

US Treasury Secretary Steven Mnuchin, “under the auspices of President Trump, has today determined that China is a currency manipulator”, the Treasury Department said in a statement late Monday. As a result, Mnuchin will engage the International Monetary Fund “to eliminate the unfair competitive advantage created by China’s latest actions”, the statement added.

The new designation is largely symbolic, since it calls for consultations with countries found to be manipulating their currencies. But it could gain teeth if the Commerce Department begins imposing tariffs on countries found to be undervaluing their currencies, as that department said earlier this year it plans to do.

The volley lobbed across the Pacific on Monday was sure to shake the global economy even further, with markets doubtful of either side’s willingness or ability to prevent hostilities from spinning out of control. Chinese state media also announced Monday that Beijing had suspended purchases of American farm exports.

Published in The Express Tribune, August 7^th, 2019.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.