By Stephani Scruggs,Contributor,The American Dossier
For over 20 years, Chinese currency manipulation has directly impacted the pocket books of every American; closing businesses, costing jobs and contributing heavily to the Great Recession. The returning strength of American manufacturing depends on stopping this most deadly tool in China’s trade war box of horrors.
The IMF definition of currency manipulation is when one country directly intervenes into the exchange market and buys another country's currency in order to gain an unfair trade advantage. Essentially, this practice makes the manipulator’s products artificially cheaper, and the victim’s products artificially more expensive. Though the IMF prohibits currency manipulation under Article 4, Section iii; many IMF member countries continue to engage in currency manipulation without punishment.
Currently ranked as the world’s worst currency manipulator, China uses this tactic to flood American shelves with ultra-low cost goods, eliminating competition from domestic American producers; while at the same time making American products imported into China far too costly for the average Chinese person to buy. China’s predatory trade practice has resulted in a $36 billion trade deficit between the two countries.
According to the Peterson Institute, a Washington based think tank, currency manipulation has a significant impact on America’s economy. By driving up the price of American products, currency manipulation impedes America's ability to sell American made products here or abroad – closing businesses. By using currency manipulation to run up a trade deficit, other countries are effectively exporting their unemployment to the U.S. – costing jobs. The Peterson Institute goes on to report that currency manipulation has robbed the American economy nearly $800 billion and 8 million jobs.
“Currency manipulation is the most significant 21st century trade barrier that American manufacturers face” said Ziad Ojackli, Senior Vice President of Ford Motor Company. Senator Rob Portman of Ohio agrees “We need a balanced approach on trade – fighting for good jobs through more exports and fighting against unfair trade practices,” said Portman, who has fought for better currency manipulation enforcement since taking office in 2011.
The International Monetary Fund, the World Trade Organization, the International Trade Commission and even former US Presidents haven’t taken any real action to stop China’s economy killing currency practices. If President Trump intends to continue his pattern of ‘winning’ for the American worker, he must take immediate action to stop Chinese currency manipulation once and for all.