Saturday, October 22, 2011
The New US Protectionism
This article discusses the recent Senate vote to pass a bill that would make imports from countries with "fundamentally misaligned" currencies subject to a duty to 'balance' the currency misalignment. No one doubts that this bill is meant to punish China. The continued animosity that Americans display towards China, and especially trade with China, is disheartening. As we know, if the US wanted to reduce its trade imbalance with China, protectionist policies are counterproductive. The US should be decreasing government spending, and increasing domestic saving. Seeking to force China to float their currency will only hurt the relationship between the US and China, at a time when they should be allies. The House of Representatives has thus far refused to vote on the bill, so this may never come to pass. However, the fact that one legislative body has passed it is a sign of the misaligned priorities of American lawmakers.
Subscribe to:
Post Comments (Atom)
Despite the major economic flaws of the bill it is easy to understand why the Senate passed it – there is widespread fear of China’s economic growth in the US and there is much irritation with China’s current economic policies. Yet if the bill is passed few in the US will benefit. The bill would hurt the average America consumer because fewer of China’s cheap products will be imported. At the same time the bill will benefit the large corporations who have been lobbying for this bill. Hopefully this unsound bill is shot down when it goes to the House of Representatives.
ReplyDeleteIt appears this has been a very difficult situation for the United States and all countries they do business with in this time of recession. The various weight of the dollars creates a lot of gaps and I think it was a good idea for Senate to get a law such as this passed.
ReplyDeleteTo the last commentator: why do you think this bill should be passed?
ReplyDelete