In Stop Currency Manipulation and Create Millions of Jobs, EPI Director of Trade and Manufacturing Policy Research Robert E. Scott writes that halting global currency manipulation through penalties or offsets is the best way to reduce trade deficits, create jobs, and rebuild the U.S. economy.

Eliminating currency manipulation by 20 countries, of which China is by far the largest, would reduce the U.S. trade deficit by between $200 billion and $500 billion in three years. This would increase annual U.S. GDP by between $288 billion and $720 billion and create 2.3 million to 5.8 million jobs. About 40 percent of the jobs gained would be in manufacturing.

“There are a number of steps that President Obama can take to end currency manipulation, which would reduce our trade deficit and bring millions of manufacturing jobs back to the United States,” said Scott. “This would not cost the taxpayers a dime; in fact, it would reduce the federal budget deficit by over a hundred billion dollars per year.”

Scott recommends several ways of combatting currency manipulation. First, Congress should pass pending legislation that would allow the Commerce Department to treat currency manipulation as a subsidy in countervailing duty trade cases. Second, the proposed Trans-Pacific Partnership trade agreement should include “strong, enforceable currency manipulation provisions,” as a majority of the House has insisted. Third, the administration should implement strategies to offset purchases of foreign assets by currency manipulating governments, which would make efforts to manipulate the dollar and other currencies costly and/or ineffective.