The trade war between the United States and China continues to escalate as the U.S. Treasury Department labeled China as a currency manipulator for devaluing its currency.
On Monday (August 5), the stock market had its worst day of the year, with the Dow, Nasdaq and S&P 500 all falling around three percent in response to China's decision to devalue its currency to seven yuan per dollar for the first time in more than a decade.
"In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past," the Treasury Department said in a statement. “This is an open acknowledgement by the [People’s Bank of China] that it has extensive experience manipulating its currency and remains prepared to do so on an ongoing basis."
U.S. Treasury Secretary Steven Mnuchin says the department will "engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China's latest actions."
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