On August 5, 2019, the Trump Administration labeled China a “currency manipulator” after the US-China exchange rate fell below 7 RMB per 1 USD. This was the first time in more than a decade that the RMB had broken through this level, and it was viewed by President Trump as a direct response to his administration’s decision to impose additional tariffs on imports from China under the ongoing Section 301 investigation into China’s industrial practices.

In this client alert, we review the legal, political, and economic implications of the US Treasury Department’s decision to label China a currency manipulator. In short, while the direct legal implications of this move are limited, this decision sends a clear signal that a resolution of the US-China trade dispute is unlikely to be achieved soon, and that US businesses should prepare for more commercial disruption.

Read the alert here.