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Many nations artificially peg their currency much lower than their real value, most notably China. That makes U.S. manufactured goods uncompetitive compared with other nations on the global market while driving down prices for imports, adding billions to our trade deficit.
Report author Robert Scott says that eliminating currency manipulation by 20 countries would reduce the U.S. trade deficit by between $200 billion and $500 billion, creating upwards of 5 million new jobs. About 40 percent of those would be in manufacturing.
“There are a number of steps that President Obama can take to end currency manipulation,” Scott said.
These include:
Pass legislation that would give the U.S. Commerce Department the power to treat currency manipulation as an unfair subsidy in trade cases
Include strong language cracking down on currency manipulation in the Trans-Pacific Partnership trade agreement
Enact strategies that would tax or offset purchases of foreign assets by governments engaged in currency manipulation. Buying large amounts of U.S. dollars is a common way the Chinese government and other nations help keep the price of their currency artificially low.
Enact strategies that would tax or offset purchases of foreign assets by governments engaged in currency manipulation. Buying large amounts of U.S. dollars is a common way the Chinese government and other nations help keep the price of their currency artificially low.
Scott finds that ending currency manipulation would create new jobs in nearly every congressional district in the nation.
Currently, there is bipartisan legislation (H.R. 1276 and S. 1114) in both houses of Congress that proposes to enact some of Scott’s suggestions.
Click here to read the EPI report.
Photo used under a Creative Commons License from Flickr user: epSos.de
