The U.S. government has a proposal that would see it impose tariffs on imports from countries determined to have undervalued currencies.
With the trade war between the United States and China far from being resolved, this latest move can only exacerbate the tensions in the global markets.
According to a Federal Register notice published on Thursday, US-based companies will be allowed to ask for anti-subsidy tariffs on goods from countries that the U.S. Treasury Department will have found to have competitively devalued their currencies.
At the moment, there is no country that meets that criterion across the world, but the U.S. move is likely to see focus turned to the broader concern regarding “undervaluation” of currencies.
Commerce Secretary Wilbur Ross said that the proposal is a notice to foreign exporters, with the Department of Commerce able to “countervail currency subsidies” deemed to be harmful to American industries.
He added that foreign nations will no longer find it easy to “use their currency policies to the disadvantage of American workers and businesses.”
The Commerce Department said in the notice that it will defer to Treasury when trying to determine whether any given currency was deemed to have been undervalued.
Though targeting countries, the notice clarifies that the proposal isn’t targeted at central bank actions that may affect currency swings.
The new currency move is being attributed to Commerce Secretary Ross and Peter Navarro, the White House trade advisor.
Though the issue had been debated before, sources close to deliberations within the trade department say it has heated up in recent weeks. It comes at a time when trade hawks in Trump’s administration have looked to exert more pressure on China as they eye a trade deal.
The U.S. and China were reportedly close to striking a trade agreement earlier this month, but talks hit a deadlock and U.S. president Donald Trump responded with tariff hikes on $200 billion worth of Chinese goods.
In addition to another threat of slapping duties on a further $300 billion worth of goods, the U.S. has gone ahead to blacklist Chinese telecom company Huawei Technologies.