Currency Misalignment is Illegal
China and other Asian countries have fundamentally misaligned currencies, giving them an unfair advantage over U.S. products through undervaluation. Undervaluation by foreign countries acts as both a subsidy for their exports and as a non-tariff barrier against imports into their territories. This effectively creates an artificial marketplace, causing significant harm to U.S. domestic manufacturers – especially small and medium-sized businesses.
Any fundamentally misaligned currency is an illegal trade subsidy and should be considered as such under U.S. laws. Small and medium-sized manufacturers are in the unfortunate position of facing restrictive domestic trade policies and illegal competition from foreign companies. Fundamental currency misalignment causes continued and protracted injury to U.S. businesses. For example, China’s fundamental misalignment of its currency results in an estimated 40 percent subsidy for its exports.
As Congress considers updating trade policies, lawmakers should work together to pass balanced and effective legislation. Although the Administration continues negotiating with China about moving to a market based-currency, Congress should:
- Provide additional resources for the agencies to enforce existing trade laws;
- Provide U.S. businesses with more tools to defend themselves against the effects of currency misalignment;
- Assist small and medium-sized businesses with trade remedy cases
Domestic manufacturers should be afforded all means available under international agreements to force foreign countries to live up to their obligations.
The Treasury Department Should Cite China as an Illegal Currency Manipulator.