The House approves a bill that would allow manufacturers in the U.S. to seek punitive tariffs on imports from any country whose currency was deliberately undervalued by 5% or more.
Twenty years ago, Americans were alarmed by reports of Japanese conglomerates buying major U.S. assets. Now we're worried about China selling us too many cheap consumer products. The latter problem has a much more profound effect on the U.S. economy: The enormous trade imbalance with China — we buy far more of their goods than they buy of ours — has caused this country to lose millions of manufacturing jobs over the past decade.
The imbalance stems at least in part from China's undervalued currency, which artificially lowers the cost of the goods it exports. Persistent criticism from U.S. officials has led China to let its currency (the renminbi, whose units are called yuan) grow in value relative to the dollar. But that growth has been too slow to make a significant dent in China's trade surplus.
On Wednesday, a fed-up House of Representatives approved a bill (HR 2378)any country whose currency was deliberately undervalued by 5% or more. The measure poses risks for the U.S., not the least being the possibility of a trade war with China. But if threatening to enact it helps persuade China to let the yuan appreciate more rapidly, then the bill could achieve its goals without an economic shot being fired.
Posted By: DAVID JOHNSON
Thursday, October 7th 2010 at 6:07PM
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