Trump not alone in seeking lower dollar, as lawmakers unveil foreign investor tax…
Trump not alone in seeking lower dollar, as lawmakers unveil foreign investor tax
By David J. Lynch
Federal Reserve Chair Jerome H. Powell has spent several months fending off President Trump’s demands to lower the value of the dollar to help American manufacturers sell their goods abroad. Under a bipartisan Senate bill due Wednesday, the central bank chief no longer would have any choice.
Sens. Tammy Baldwin (D-Wis.) and Josh Hawley (R-Mo.) are introducing legislation that would require the Fed to balance the nation’s current account, the broadest measure of the trade balance, within five years. Under the bill, the task would become a third official mandate for the Fed, along with maintaining stable prices and promoting full employment.
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The legislation would empower the Fed to impose a “market access charge” on all foreign purchases of U.S. stocks, bonds, property, and other assets. Supporters say the modest fee would discourage speculative short-term investments, reducing demand for dollars and causing the greenback to settle at a lower value, while not discouraging purchases of long-term assets such as factories.
Foreign investors purchased more than $21 trillion worth of U.S. stocks and bonds last year, according to Fed data.
Those backing the cross-border tax say the dollar’s value has been persistently elevated for decades, making American goods more expensive on world markets and encouraging U.S. consumers to buy imports. The resulting trade deficits have erased millions of U.S. factory jobs, they say. …
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