U.S. Government Proposes Rule To Allow Tariffs On Products From Countries That Undervalue Currency
The U.S. Commerce Department announced a new proposal last week that, as Politico’s “Morning Trade” explains, if implemented would allow domestic manufacturers who believe foreign competitors can sell their goods at unfairly low prices because their government is deliberately undervaluing its currency to ask the Commerce Department to impose countervailing duties.
In a press release, the department explained U.S. law defines a countervailable subsidy as a financial contribution from a government or public entity that is specific and that provides a benefit to a foreign producer or exporter.
Commerce Secretary Wilbur Ross argued, “This change puts foreign exporters on notice that the Department of Commerce can countervail currency subsidies that harm U.S. industries … Foreign nations would no longer be able to use currency policies to the disadvantage of American workers and businesses. This proposed rulemaking is a step toward implementing President Trump’s campaign promise to address unfair currency practices by our trading partners.”
In a Federal Register notice, available here, the department identified the criteria it would use to determine if countervailing duties should be imposed for currency undervaluation.
The department also outlined a process by which it would accept public comments over the next 30 days. It did not say when it expected the policy change to go into effect.
The move, Politico noted, “appears to target China.”