Treasury Secretary Steven Mnuchin designated China a currency-manipulating country a day after the nation’s central bank allowed the Chinese yuan to fall to a new low against the U.S. dollar and trigger the biggest slump this year of US stocks.
“Secretary Mnuchin, under the auspices of President Trump, has today determined that China is a Currency Manipulator,” the department said in a statement.
“As a result of this determination, Secretary Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions.”
The devaluation of the yuan reduces the relative price for Chinese goods purchased abroad, making U.S. products comparatively more expensive for foreign buyers.
The People’s Bank of China (PBOC) typically holds the yuan within a certain stabilizing range, though the nation has long been accused of devaluing its currency to gain an edge in trade.
Trump had long promised to label China a currency manipulator, which opens the country to potential international penalties.
And on Monday, he accused Beijing again of devaluing its currency to gain an unfair edge in trade after the yuan-to-dollar exchange rate fell to a low of 7 to 1. The move was widely seen as a response to new U.S. tariffs on Chinese goods slated to go into effect on September 1.
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