US Companies Allowed to Pursue Tariffs Against Currency Manipulators
As of April 6th , companies thought to be hurt by foreign competitors due to either low currencies or flat out currency manipulation now have a way to combat the lost profits by adding tariffs against them.
“This Currency Rule is an important step in ensuring that unfair trade practices are properly remedied,” Commerce Secretary Wilbur Ross said. The Commerce Department said that it expected only a handful of additional countervailing-duty cases to be filed. It is estimated that money from the new tariffs would be between $4 million and $21 million a year.
One of the problems is that who makes the call if the currency is manipulated purposely or just undervalued. Last year, the US formally labeled China a “‘currency manipulator,” although that was rescinded after the two countries signed a phase one trade deal.
“There is no precise way to measure currency undervaluation,” said Mark Sobel, a former U.S. Treasury official who worked on currency valuations and has criticized the rule.
It is important to note that a finding of currency manipulation by the Treasury is not required for a company to be granted an award. This policy will make the playing field a little more even as another tool has been added to combat a problem that has hurt US companies for decades.