THE UNITED STATES has formally accused China of manipulating its currency, marking the second major escalation in the two countries’ spiraling trade war in just 24 hours.

Washington’s sudden move came as the China government allowed the yuan to fall below 7 to the dollar for the first time in about a decade.

Wall Street yesterday posted its worst one-day losses of 2019 as hope of any near-term resolution to the trade war appeared to slide out of view.

In a Twitter outburst, Trump described the move as “a major violation” and accused Beijing of weakening the yuan “to steal our businesses and factories.”

US Treasury Secretary Steven Mnuchin, “under the auspices of President Trump, has today determined that China is a currency manipulator,” the Treasury Department said in a statement last night.

As a result, Mnuchin will engage the International Monetary Fund “to eliminate the unfair competitive advantage created by China’s latest actions,” the statement said.

The new designation is largely symbolic, since it calls for consultations with countries found to be manipulating their currencies.

But it could gain teeth if the US Commerce Department begins imposing tariffs on countries found to be undervaluing their currencies, as that department said earlier this year it plans to do.

Chinese state media also announced yesterday that Beijing had suspended purchases of American farm exports.

The yuan’s weakening came just days after Trump announced plans to raise tariffs on another $300 billion in Chinese imports starting 1 September, accusing Beijing of failing to live up to commitments in trade negotiations.

That would mean virtually all of the roughly $660 billion in goods exchanged annually between China and the United States are subject to trade barriers.

- © AFP 2019 with reporting by Michelle Hennessy.