The Treasury Department on Monday labeled China a currency manipulator, escalating the U.S.-China trade war with a significant rebuke to Beijing.

Treasury Secretary Steven Mnuchin Steven Terner MnuchinOn The Money: Anxious Democrats push for vote on COVID-19 aid | Pelosi, Mnuchin ready to restart talks | Weekly jobless claims increase | Senate treads close to shutdown deadline Vulnerable Democrats tell Pelosi COVID-19 compromise 'essential' Pelosi asks panels to draft new COVID-19 relief measure MORE designated China a currency-manipulating country a day after the nation’s central bank allowed the Chinese yuan to fall to a new low against the U.S. dollar.

"Secretary Mnuchin, under the auspices of President Trump Donald John TrumpSteele Dossier sub-source was subject of FBI counterintelligence probe Pelosi slams Trump executive order on pre-existing conditions: It 'isn't worth the paper it's signed on' Trump 'no longer angry' at Romney because of Supreme Court stance MORE, has today determined that China is a Currency Manipulator," the department said in a statement.

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“As a result of this determination, Secretary Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions,” it continued.

Trump has long promised to label China a currency manipulator, which opens the country to potential international penalties, accusing Beijing of devaluing its currency to gain an unfair edge in trade.

“China has always used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices. Not anymore!” Trump tweeted Monday.

Despite Trump’s ire, the Treasury Department declined to label China a currency manipulator until Monday evening, after the yuan-to-dollar exchange rate fell to a low of 7-to-1. The move was widely seen as a response to new U.S. tariffs on Chinese goods slated to go into effect on Sept. 1.

U.S. stocks added to their heavy losses Monday after Treasury's announcement, with overnight trades setting up a 480-point drop for Tuesday morning. The Dow Jones Industrial Average and S&P 500 index fell close to 3 percent Monday, while the Nasdaq composite sunk almost 3.5 percent.

The devaluation of the yuan reduces the relative price for Chinese goods purchased abroad, making U.S. products comparatively more expensive for foreign buyers.

The People’s Bank of China (PBOC) typically holds the yuan within a certain stabilizing range, though the nation has long been accused of devaluing its currency to gain an edge in trade. The PBOC appeared to allow the yuan to fall Monday after intervening throughout the year to keep it closer to the dollar during trade talks with the U.S.

Treasury's designation of China as a currency manipulator is largely symbolic for now since the U.S. cannot seek formal penalties until it attempts to work out a deal with Beijing. But the move is likely to raise trade tensions between the Trump administration and China, which are already at unprecedented highs.

Trump announced last week he would impose a 10 percent tariff on $300 billion in Chinese goods after talks Shanghai between the nations did not yield progress. Trump has already imposed a 25 percent tariff on $250 billion in Chinese goods, not including the tariffs he levied on foreign steel and aluminum.

Updated at 6:49 p.m.