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Photo by Zhang Peng/LightRocket via Getty Images

U.S. Treasury Secretary Steven Mnuchin on Monday night declared China to be a currency manipulator, just hours after the Chinese government allowed the yuan to slip below a 7-to-1 dollar ratio for the first time in over a decade.

Why it matters: This is a further ratcheting up of trade tensions between the two countries, and also marks the first time any U.S. president has used the currency manipulator label since 1994.

How it works: Under a 2015 law, in order to be a currency manipulator, a country needs to spend 2% of GDP on currency manipulation over a 12-month period. China is not doing this. If anything, China was keeping the yuan artificially strong until Trump ratcheted up the trade war on Thursday.

Why now: Trump campaigned on labeling China a currency manipulator, but was persuaded not to on the grounds that it would not be helpful. Today, however, voices from both the right (Lou Dobbs) and left (Chuck Schumer) have been urging the president to take this step.

What’s next: The currency manipulator designation does not come with particularly harsh remedies. First comes a year of negotiations, and after that even the Trump administration's proposed beefed-up penalties are small, amounting to no more than about $20 million per year. The move will certainly annoy the Chinese, however, and make any trade deal harder to achieve.

Go deeper

Updated 2 mins ago - Politics & Policy

Senators grill top Pentagon leaders over Biden's Afghanistan exit

Photo: Carolone Brehman/Pool/AFP via Getty Images

Defense Secretary Lloyd Austin, Joints Chiefs of Staff Chairman Gen. Mark Milley, and the head of U.S. Central Command, Gen. Frank McKenzie, are testifying before Congress for the first time since the chaotic U.S. withdrawal from Afghanistan.

The latest: Austin said in his opening statement that military leaders began planning for a non-combatant evacuation of Kabul as early as the spring, and that this is the only reason U.S. troops were able to start the operation so quickly when the Taliban captured the city. "Was it perfect? Of course not," Austin acknowledged.

Congress must raise the debt limit by Oct. 18, Yellen warns

U.S. Treasury Secretary Janet Yellen during a press conference at the Capitol on Sept. 23. Photo: Sarah Silbiger/Bloomberg via Getty Images

Treasury Secretary Janet Yellen told House Speaker Nancy Pelosi in a letter Tuesday that the United States will likely begin to default on its loans shortly after Oct. 18 if Congress fails to raise or suspend the debt ceiling by then.

Why it matters: The U.S. has never defaulted on its financial obligations, and Yellen has previously warned that doing so would cause irreparable damage to the U.S. economy and global financial markets.

Ben Geman, author of Generate
33 mins ago - Energy & Environment

The energy crises roiling Europe and China — and beyond

Data: FactSet; Chart: Axios Visuals

Energy crises in Europe and China are spilling into economic forecasts, supply chains and beyond.

Driving the news: Europe has for weeks been facing sky-high natural gas and power prices, while China — the world's second-largest economy — is facing electricity shortages that are hobbling factories.

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