The U.S. is counterpunching China in the latest battle royale that has become the U.S.-China trade war.
Secretary Steven Mnuchin, with the support of President Trump, determined that China is in fact unfairly influencing its currency – allegations that had been made by the president multiple times throughout the day.
“In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past,” the Treasury Department’s statement read. “The context of these actions and the implausibility of China’s market stability rationale confirm that the purpose of China’s currency devaluation is to gain unfair competitive advantage in international trade.”
The Treasury Department will work with the International Monetary Fund to try to rectify the “unfair competitive advantage created by China’s latest actions.”
Earlier in the day, Trump said China has “always used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices.”
Trump also said the currency manipulation was a “major violation that would greatly weaken China over time.”
The yuan’s movement on Monday combined with the administration’s announcement that it plans to impose 10 percent tariffs on the remaining $300 billion worth of Chinese goods coming into the U.S. next month, sent markets spiraling.
U.S. stock futures signaled another bruising session may lie ahead on Tuesday after stocks posted their worst day of 2019 during Monday’s trading session, as talks between the country’s two largest economies have stalled. The Dow closed the day 767 points lower.
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When the yuan falls against the U.S. dollar, it makes China’s exports cheaper for overseas buyers.
The U.S. and Chinese delegations are expected to resume talks next month.