The head of the White House believes that weakening the currency will help local producers
The Head of the White House offered his option to increase the competitiveness of local companies. He believes that the weakening of the dollar will help strengthen the position of American business. Last year the Federal Reserve resorted to three times the rate cuts and regularly increased the liquidity of the economy by printing new banknotes. However, this strategy did not bring the expected result, and therefore new ways of solving the problem are being developed in the US Department of State.
Donald Trump has not once expressed his dissatisfaction with the dollar rate. He believes that the inflated value of the national currency impedes the development of exports, which in turn leads to increased risks for the deficit within the trade balance. For example, last year the latter was observed at 853 billion dollars.
A decline in the U.S. national currency will make it easier for foreign consumers to buy local products. Increased demand will enable production to develop and the deficit will be reduced.
Last year, the head of the White House accused China and the European Union of artificially depreciating their currencies, so their producers are more in demand in the global market. In order to balance forces, the Federal Reserve also needs to resort to such steps by reducing the dollar rate.
This strategy has several advantages. According to the UN report, in 2019 the world trade volume decreased by 2.4%, while in 2018 this figure rose by 10%. The decline is predicted to continue in the future.
In view of this situation, it is very likely that the central banks of many countries will start resorting to various measures to stimulate the economy. However, the interest rates are already quite low, so the currency will have to be weakened in order to attract as many consumers as possible.
An important point for the US and other countries is to improve the competitiveness of local producers. To this end, various duties are imposed on goods imported from other countries.
According to the new regulation from the government, U.S. companies have the right to file a complaint against foreign producers who have a market advantage solely because of the weakened national currency. In this case, the goods of the foreign company will be subject to additional duties.
In addition, the U.S. Department of Commerce plans to analyze the activities of various exporters and identify the use of weak currency as an advantage over others.
The White House believes that the introduction of new duties is an effective tool in the fight against dishonest suppliers. This will protect American companies and strengthen their position in the world market. First of all, increased loans will affect producers from Japan and China, but European products will also be affected.