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US Commerce Department proposes countervailing duties for currency manipulation

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US Commerce Department proposes countervailing duties for currency manipulation

The U.S. Commerce Department proposed changes to the country's countervailing duty law in a bid to protect American companies and workers against unfair currency devaluation by trading partners.

The proposal would allow the Commerce Department to impose countervailing duties on goods imported from countries that subsidize products through the devaluation of their currency against the U.S. dollar. The duties could only be imposed once the department and the U.S. International Trade Commission determine the final impact of such subsidies.

The move comes amid escalations in the trade dispute between the U.S. and China, with additional tariffs being imposed on billions of dollars' worth of goods from both sides and the U.S. blacklisting Huawei Technologies Co. Ltd. Beijing could retaliate to the latest measures from the U.S. by devaluing the yuan, though it is unlikely as it could give the U.S. an excuse to label China as a currency manipulator, according to Iris Pang, economist for Greater China at ING Research.

U.S. Treasury Secretary Steven Mnuchin has previously noted that going forward, the U.S. will seek to include measures to deter currency manipulation in its trade deals with other countries. The U.S. included currency provisions in the revised version of the North American Free Trade Agreement, now known as the U.S.-Mexico-Canada Agreement.