As self-media creators, we're tracking a new policy, a new rule issued by the U.S. Department of Commerce, that addresses the "offsetting subsidies" that undervalued exchange rates pose to exported goods. This means that businesses importing goods from "undervalued" countries will face additional countervailing duties.
The history of the "countervailing duty" policy can be traced back to the late 19th century in the United Kingdom, when it first imposed the tax on Europe in order to save the shrinking sugar market. Since then, countervailing duties have become a powerful tool for trade protectionists, and the United States has been actively using this policy. In this new rule, the United States will mainly target emerging economies that have been accused of being "currency manipulators," with China being one of the biggest targets.
Not long ago, China and the United States successfully reached a phase one trade deal, and after nearly two years of negotiations, the two sides finally shook hands. The deal appears to cast a shadow of rapprochement over trade relations and temporarily rips off China's label as a "currency manipulator." China's Ministry of Foreign Affairs responded to the matter, insisting that China has never engaged in currency manipulation and that the latest U.S. conclusion is in line with the facts and the consensus of the international community.
In fact, the trade relationship between China and the United States is interdependent, and the United States is buying Chinese goods regardless of whether the price is high or low; Similarly, China is buying high-tech products regardless of the price of high-tech products in the United States. Therefore, the use of countervailing duties as a means by the United States on exchange rate issues may not be as desirable. This policy is more like a "double-edged sword" that could adversely affect the United States itself.
In recent years, especially since the outbreak of the subprime mortgage crisis, US politicians have issued strong accusations against China's "subsidies" behavior, arguing that China does not play by the rules. However, China has been strong on the issue of "countervailing duties", and even on the issue of "currency manipulation", US accusations are untenable. Interestingly, despite the widespread perception in the business community that the renminbi is undervalued, when they put pressure on China to change, the renminbi did not appreciate, but rather depreciated. The International Monetary Fund, G7 members, and major international media have defended China, but some business people have publicly demanded that the Fed stop raising interest rates and implement interest rate cuts, but they have been accused of manipulating the exchange rate. The WTO has repeatedly ruled that US countervailing measures violate multilateral rules.
At present, the U.S. manufacturing industry is facing serious problems, the trade deficit remains high, and the traditional industries of the United States are at a disadvantage in international competition, which is a problem of the U.S. industrial structure, not other countries that have seized the market share of the United States. Instead of solving its own problems through trade-destroying measures, such as countervailing measures, the United States should focus on internal optimization and improvement.
While it may not appear that Washington will immediately take countervailing duty measures, it will be a bargaining chip in subsequent negotiations. There is no so-called "Thucydides trap" in the world, but if the United States repeatedly makes strategic miscalculations, it will one day fall into the "trap" dug by itself.