Alliance for American Manufacturing (AAM) President Scott Paul wrote to Treasury Secretary Jack Lew on Wednesday to urge him to designate both China and Japan as currency manipulators in the agency’s upcoming Report of Congress on International Economic and Exchange Rate Policies.
Yes, you read that right.
China has yet to be officially named a currency manipulator by the Treasury Department. In fact, Treasury has declined to name China as a currency manipulator 11 times under the Obama administration — despite plenty of compelling evidence that the country is manipulating its currency.
As a result of that currency manipulation, the United States has amassed a record-setting trade deficit with China. Though August 2014, the U.S. goods trade deficit with China was $10 billion higher than in the same period in 2013. China isn’t alone in manipulating its currency, either. Japan also has taken steps to weaken the yen, and the U.S. goods trade deficit with Japan is the second highest among our trading partners.
Currency manipulation is among the chief reasons why American manufacturing job growth continues to drag — just 31 percent of the jobs lost during the Great Recession have returned. Paul writes to Lew:
“Currency manipulation has helped fuel China’s flood of cheap and unfairly priced products into our market and diminished our potential to export more of our products to China’s customers… As the President often asserts, the success of America’s manufacturing sector is key to securing economic growth and creating family-supporting jobs. But when foreign governments manipulate their currencies to gain a trade advantage, market-based competition is undermined.”
We’ve said this once, and no doubt we’ll say it again: American manufacturers and workers can successfully compete against anyone in the world, as long as they have a level playing field. But right now, currency manipulators like China and Japan are not playing fair.
Lew can help set things right when he issues his report on Oct. 15.
Ending currency manipulation could create 5.8 million new manufacturing jobs over the course of three years. The first step is designating countries who manipulate their currency as currency manipulators.