China’s currency devaluation – The U.S. dollar was already at multi-year highs against the currencies of many of our major import markets and competitors, and that disadvantage worsened with China’s recent devaluation of the yuan.
More details on the impact of this move are available online.
China’s action is also likely to heighten the already-significant attention given to currency manipulation when trade issues come before Congress. A customs and trade enforcement bill (H.R. 644) is set to be considered in conference committee after Congress returns from its August recess, and one of the most controversial differences between the House and Senate versions is a Senate provision, opposed by the White House, which requires retaliatory measures to be imposed on trading partners engaged in currency manipulation. Some members of Congress have also threatened to withhold support for the Trans-Pacific Partnership (TPP) unless it includes strong provisions regarding currency manipulation. While China is currently not a TPP participant, the actions taken this week could provide momentum for members of Congress who are inclined to oppose TPP.