House threatens Chinese tariffs if currency games continue
The House fired a warning shot at China on Wednesday, passing a bill with strong bipartisan support that would raise tariffs on Chinese imports if the Asian giant keeps an artificial lid on its currency value.This is a bad deal for US consumers. I think it will ultimately be a bad deal for US manufacturers is China retaliates with higher tariffs on US goods. It will also probably be a bad deal for the world economy and may cause another great depression.
Republicans from industrial states joined most Democrats in giving new powers to the Commerce Department to consider whether China's policy of tying the value of its currency to the dollar, rather than allowing it to rise in response to market forces, represents an unfair trade practice.
The vote was 348 to 79, with all but 5 Democrats and 74 Republicans voting in favor.
"Talk doesn't work," said House Ways and Means Committee chairman Sander Levin, rejecting protests from the Obama administration — like the Bush administration before it — that the best way to persuade China to abandon its practices is to use quiet diplomacy in international forums.
China promised to loosen its currency restrictions this spring in response to international pressures, but the Chinese yuan or renmimbi has risen by less than 2 percent since then. Economists estimate that it is undervalued by as much as 40 percent.