Congress finally ratified long-stalled trade pacts with Colombia, Panama and South Korea. But the
previous day the Senate threw down the gauntlet to China. It passed, by a stonkingly bipartisan margin of 63-35, a bill that would authorise the Commerce Department to impose countervailing tariffs on Chinese imports it deems to have benefited from an undervalued currency. The bill is unlikely to pass in the House, but the vote is a sign that China-bashing, always popular in Congress, has become more so as America’s job market has struggled.
Well not necessarily so. If China indeed is undervaluing its currency, then the U.S. can't just sit and take the hit of that effect so it should and must respond.
ReplyDeleteI don't think America is prone to China-bashing as much as China-fearing. They are fearful that China will outgrow them, but at the same time they're borrowing so much from them so it seems strange..
I think the best thing for China and the U.S. to do is to get together in a meeting and solve this problem of whether or not China is undervaluing the currency. Currently, China and U.S. are both greatly benefiting from each other and it would be a shame to see their foreign relations deteriorate.
I'm not sure I agree with the Senate's vote, but putting pressure on China to either prove the lack of, or undo the undervaluing of currency does not seem too crazy.
Interesting debate, but I feel that there will be no concrete resolution on this matter anytime soon. I say this for the simple reason that, both China and the US need each other. China needs a market such as the US for its industries to sustain and the US needs China to meet its demand for products. US is also helpless in that it is highly indebted to China. So as of now, I just think, that they can sit together and have a cup of tea - like Andrew said - but there wont be any concrete resolution that will come out. Both will act in their own interests, while maintaining relations with each other! As far as the tariffs go, I think these things come and go, but the bigger picture remains.
ReplyDeleteIf this is made into law how China reacts to it will be interesting. It may appreciate its currency just to avoid the tariff, but there could also be retribution leading to a trade war. In the end I say fewer tariffs is probably better than more tariffs and in this case I don't think that a tariff is particularly wise.
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