As reported by the Journal, the White House proposal on currency manipulation would allow U.S. firms to bring complaints against China or other countries to the U.S. Commerce Department.
Scott Kennedy, Deputy Director, Freeman Chair in China Studies at the Center for Strategic and International Studies, said the reported proposal sounded “like a serious option that is on the table.”
“This has not been attempted in the past, because it could very well violate the U.S.’ WTO commitments,” Kennedy said. “Subsidies are usually defined as needing to apply to a specific sector or economic entity, and China’s currency policy is country-wide. Nevertheless, the Trump administration may be willing to assume the risk of WTO litigation in order to find new tools to counter what it sees as unfair Chinese competition.”
That said, the overall tone of the U.S.-China relationship appears to be less heated than some had worried a few weeks ago.
It took nearly three weeks for Trump to actually contact Chinese President Xi Jinping, but in the call Trump affirmed the “One China” policy that Beijing insists upon with regard to Taiwan, but which Trump in December was threatening to ignore.
Trump selected China hawks to lead to the National Trade Council and the Office of the U.S. Trade Representative, but nothing has happened yet on labeling China a currency manipulator or imposing a large tariff on Chinese imports.
“The thing that is coming into relief right now is there isn’t going to be a trade war,” Shapiro said. “It’s going to be negotiation on both sides.”
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