{"id":20105,"date":"2019-08-06T14:03:24","date_gmt":"2019-08-06T22:03:24","guid":{"rendered":"https:\/\/associatednews.info\/content\/u-s-china-trade-war-spreads-from-tariffs-to-a-battle-over-currencies\/"},"modified":"2019-08-06T14:03:24","modified_gmt":"2019-08-06T22:03:24","slug":"u-s-china-trade-war-spreads-from-tariffs-to-a-battle-over-currencies","status":"publish","type":"post","link":"https:\/\/associatednews.info\/content\/u-s-china-trade-war-spreads-from-tariffs-to-a-battle-over-currencies\/","title":{"rendered":"U.S.-China Trade War Spreads From Tariffs To A Battle Over Currencies"},"content":{"rendered":"

By Scott Horsley<\/a><\/span> <\/p>\n

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\n Currency dealers monitor exchange rates at the KEB Hana Bank in Seoul, South Korea. China’s currency and the U.S. stock market stabilized Tuesday, after a dramatic drop the day before.<\/p>\n

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Jung Yeon-Je\/AFP\/Getty Images<\/p>\n

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Jung Yeon-Je\/AFP\/Getty Images<\/p>\n

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The U.S. and China opened a new front in their trade war this week, when China allowed its currency to fall, triggering a sharp drop in the U.S. stock market. <\/p>\n

The seemingly modest adjustment in global exchange rates had a seismic effect on Wall Street confidence, rattling retirement accounts and prompting a new round of bellicose rhetoric from President Trump.<\/p>\n

Both the market and the currency stabilized on Tuesday, but not before investors got a stomach-churning preview of what an escalating trade war might look like. <\/p>\n

The U.S. Treasury Department formally accused China of manipulating its currency<\/a>, echoing a complaint the president had made via Twitter<\/a>. But experts say China’s actions do not amount to currency manipulation, and they warned that Treasury Secretary Steven Mnuchin is squandering credibility that the U.S. might need in the future.<\/p>\n

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“Currency manipulation has a very specific definition under U.S. law,” said David Dollar, a former official with the Treasury Department and the World Bank. “China does not meet the standard.” <\/p>\n

Although China does have a trade surplus with the U.S., it does not meet two other Treasury Department tests for currency manipulation, analysts said: It doesn’t have a large surplus in its broader “current account,” and it hasn’t made persistent, one-sided moves to interfere in currency markets. <\/p>\n

Dollar, who is now with the Brookings Institution, says currency manipulation usually describes a country that is keeping its currency artificially low, in an effort to make its exports more affordable or to discourage imports. <\/p>\n