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Secretary Steven Mnuchin determined that China is in fact unfairly influencing its currency to “gain unfair competitive advantage in international trade.” But what exactly does the designation mean?
It will officially kick off a process, whereby the Treasury Department will research and issue a report to the International Monetary Fund (IMF) about the situation.
The U.S. is supposed to begin negotiations with China regarding its currency manipulation – which can either be bilateral or mediated by the IMF. The Treasury on Monday conveyed its intent to go through the IMF.
Sources told FOX Business’ Edward Lawrence that in order for the U.S. to remove China from its currency manipulator list, the administration wants Beijing to lower its trade imbalance with the U.S., increase transparency regarding movements in its currency exchange rate and increase transparency about China’s reserve management operations.
The U.S. has been considering designating China as a currency manipulator for years. It had previously done so between 1992 and 1994.
Monday’s decision comes amid an ongoing trade war between the world’s two largest economies – as Beijing let the yuan fall to a more than ten-year low against the U.S. dollar after Trump announced his intent to ramp up tariffs on Chinese goods.
As of Sept. 1, the U.S. will impose a 10 percent levy on the remaining $300 billion worth of goods entering the country from China.
Despite the escalation in the trade battle, the two country’s delegations are expected to meet in Washington next month.
FOX Business’ Edward Lawrence contributed to this report