The U.S. Treasury Department labeled China a “currency manipulator” after they decided to lower the value of their currency which had catastrophic effects on the American economy.
What We Know:
- The Dow plunged 767 points, making it the worst day for the market this year. This comes after the People’s Bank of China dropped its currency below 7 yuan to the U.S. dollar. This is the first time this has occurred since 2009.
- This tactic makes it more expensive for Chinese citizens to purchase foreign-made goods, keeping money in the country. It also makes Chinese-goods cheaper to purchase for foreign buyers. The PBOC explained that the decision was “due to the effects of unilateralist and trade-protectionist measures and the expectations for tariffs against China.”
- President Trump tweeted, “China has always used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices.” “Not anymore!” he said.
- China is responding to Trump’s threats of imposing a 10% tariffs on about $300 billion worth of Chinese goods, the Wall Street Journal reported. This is the latest development in the U.S.-China trade war that began last year.
- Last September, the U.S. imposed a 10 percent tariff that affected $200 billion worth of Chinese goods. This past May, they increased to 25 percent and affected $250 billion worth of goods.
China officials have also told CNBC that companies are suspending U.S. agricultural product purchases in response to the trade war.
Unfortunately, there appears to be no resolution in sight. We will continue to follow this story and update as needed.