Study Finds 25.5-Percent Dollar Overvaluation Spurs Trade Deficit

The Coalition for a Prosperous America (CPA) released a paper this week with an improved methodology for calculating exchange rate misalignment and its connection to the U.S. trade deficit, stagnation in wages and living standards, and slower economic growth. Michael Stumo discusses an innovative solution to the continuing problem of dollar overvaluation called the Market Access Charge (MAC).

“The U.S. dollar is 25.5 percent overvalued,” said Michael Stumo, CEO of CPA. “This bloated dollar problem amounts to a 25.5 percent export tax which U.S. businesses and workers must overcome to sell our goods and services competitively in global markets. Dollar overvaluation dramatically hampers President Trump’s ability to reduce the trade deficit, create good paying jobs and rebuild the middle class.”

The paper, entitled “The Threat of U.S. Dollar Overvaluation: How to Calculate True Exchange Rate Misalignment & How to Fix It,” reveals that the exchange rates of Japan, Germany, China, and South Korea are significantly undervalued, subsidizing their exports and severely limiting US market access. [more...]