This bill would require federal entities that manage trade laws to investigate currency undervaluations by foreign countries. These "countervailing duty" investigations would offer countervailable subsidies to a country's exporters or products at the request of an interested party. Countervailable subsidies are offered to countries whose products are hurt by unfair trade practices — and in this case, could lead to a duty being imposed on products imported from the country with the devalued currency.
Currency devaluation makes a country’s exports more competitive globally when compared to exports from countries with stronger currencies. Fears of a currency war among China, Vietnam, and other Asian countries have grown as those nations seek to boost the export-reliant manufacturing sectors of their economies. Announcements from central banks in China and Vietnam that they would devalue their currency fueled a contraction in the global financial markets in August 2015.
For the purposes of this bill, the fact that the subsidy caused by an undervalued currency is also provided to non-exporters in that foreign country would not preclude a countervailing duty and anti-dumping duty investigation from proceeding.