By Phillip Orchard
The U.S. is running out of ways to escalate the trade war with China.
Last week, after nearly two decades of threats from U.S. President Donald Trump and his predecessors, the U.S. Treasury formally labeled China a currency manipulator. This followed Trump’s announcement that new 10 percent tariffs on some $300 billion in Chinese goods would kick in on Sept. 1, which sent the Chinese currency crashing to less than 7 yuan to the dollar for the first time since 2008.
The move has been widely characterized as a dramatic escalation in the trade war, expanding the U.S. offensive from tariffs, tech controls and investment to asset prices. But by the United States’ own definition, China hasn’t actually been intentionally weakening its currency. Quite the opposite, in fact. And the label itself won’t do anything to pressure China into major concessions. What it really suggests is that the U.S.-China trade war has entered a new phase – one marked by waiting around for a change in conditions that forces one side or the other to blink.
How China Manages the Yuan
For more than a decade beginning in the early 2000s, Beijing was indeed quite transparently keeping the yuan artificially weak, buying up some $4 trillion in...
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