America and China are about to come to blows, as the US Senate decides, today, whether or not to accept legislation that would punish China for alleged currency manipulation. Such manipulation has been blamed for costing American jobs, and the proposal is trying to impose retaliatory duties on Chinese exports if the yuan’s value is unfairly “misaligned.”
Eyes on the House
It is predicted by those in the know that the Democratic-held Senate will be approving the measure today. Assuming it is approved, all eyes will then be on the Republican-led House of Representatives. Speaker John Boehner has warned about the dangers of this bill saying,
“You could start a trade war. And a trade war, given the economic uncertainty here and all around the world — it’s just very dangerous, and we should not be engaged in this.”
Obama Weighs In
President Barack Obama expressed his displeasure with the legislation last week, but he worried that the legislation might violate World Trade Organization rules. In recent White House press conference, the President said,
“China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States.”
Debate About What’s Next
While few people argue that China is using unfair practices in keeping the yuan low against the dollar, many vary on what should be done about it. The legislation, opponents argue, could spark a trade war with China and they point out that a successful bill would actually increase the cost of commodities and consumer goods from China. And this would hurt, rather than help, the American public.
Legislation backers argue that enough is enough and that it’s time to take on Beijing.
Time will tell who’s right.