The Daily Update - US Considers Tariffs on Undervalued Currencies

The US government is said to be considering proposing tariffs on goods from those countries it deems to have undervalued their currencies in order to get the upper hand when exporting to the US. The idea of countries manipulating their currencies is nothing new, Trump has long accused China of such things, in a roundabout way, however, his administration has been looking at how to take a more aggressive approach to the situation. The US Commerce Department said its proposed rule change would amend the normal countervailing duty process to include new criteria for currency undervaluation.

The proposal would let companies based in the US seek anti-subsidy tariffs on exports from countries that the US Treasury Department believes is engaging in competitive devaluation of their currencies.

The idea is said to be the brainchild of Wilbur Ross, the Commerce Secretary and Peter Navarro, White House trade adviser, who have both been pushing for the inclusion of the currency tool since the early days of Donald Trump’s presidency. Although that is not to say others have not had concerns about currency manipulations for a number of years. In 2010 the now US trade representative, Robert Lighthizer, told a congressional commission ‘We should respond to China’s currency manipulation’, adding ‘The US government should treat currency manipulation as a subsidy’.

As well as China, the new rule could also put exports at risk from a number of other countries, including Germany, South Korea, India, Switzerland and Japan. These counties were all on the ‘monitoring list’ of the Treasury Department’s semi-annual currency report, which tracks amongst other things high bilateral trade surpluses, high global current account surpluses and currency market interventions.

Ross said: ‘This change puts foreign exporters on notice that the Department of Commerce can countervail currency subsidies that harm U.S. industries’, adding ‘Foreign nations would no longer be able to use currency policies to the disadvantage of American workers and businesses’.

Please read this important information before proceeding. It contains legal and regulatory notices relevant to the information on this site.

This website provides information about Stratton Street Capital LLP ("Stratton Street"). Stratton Street is authorised and regulated by the UK's Financial Conduct Authority. The content of this website has been prepared by Stratton Street from its records and is believed to be accurate but we do not accept any liability or responsibility in respect of the information of any views expressed herein. The information, material and content provided in the pages of this website may be changed at any time by us. Information on this website may be out of date and may not be updated or removed.

The website is provided for the main purpose of providing generic information on Stratton Street and on our investment philosophy for the use of financial professionals in the United Kingdom that qualify as Professional Clients or Eligible Counterparties under the rules of the United Kingdom Financial Conduct Authority (the "FCA"). The information in this website is not intended for the use of and should not be relied on by any person who would qualify as a Retail Client. Products and services referred to on this website are offered only at times when, and in jurisdictions where, they may be lawfully offered. The information on this website is not directed to any person in the United States. The provision of the information on this website does not constitute an offer to purchase securities to any person in the United States (other than a professional fiduciary acting for the account of a non-U.S person) or to any U.S. person as such term is defined under the Securities Act of 1933, as amended.

The website is not intended to offer investors the opportunity to invest in any Alternative Investment Fund ("AIF") product. The AIFs managed by Stratton Street are not being marketed in the European Economic Area ("EEA") and any eligible potential investor from the EEA who wishes to obtain information on the AIFs will only be provided with materials upon receipt by Stratton Street of an appropriate reverse solicitation request in accordance with the requirements of the EU Alternative Investment Fund Managers Directive ("AIFMD") and national law in their home jurisdiction. By proceeding you confirm that you are not accessing this website in the context of a potential investment by an EEA investor in the AIFs managed by Stratton Street and that you have read, understood and agree to these terms.

No information contained in this website should be deemed to constitute the provision of financial, investment or other professional advice in any way. The website should not be relied upon as including sufficient information to support any investment decision. If you are in doubt as to the appropriate course of action we recommend that you consult your own independent financial adviser, stockbroker, solicitor, accountant or other professional adviser. Past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. An application for any investment or service referred to on this site may only be made on the basis of the offer document, key features, prospectus or other applicable terms relating to the specific investment or service.

Where we provide hypertext links to other locations on the Internet, we do so for information purposes only. We are not responsible for the content of any other websites or pages linked to or linking to this website. We have not verified the content of any such websites. Such websites may contain products and services that are not authorised in your jurisdiction. Following links to any other websites or pages shall be at your own risk and we shall not be responsible or liable for any damages or in other way in connection with linking.

By using this site, you should be aware that we may disclose any information that we hold about you to any regulatory authority to which we are subject, or to any person legally empowered to require such information.

This website uses cookies to improve user experience, by clicking the "I Accept" button below means you consent to the use of cookies on our website.