Here comes protectionism: South Carolina Senator Lindsey Graham has told reporters that he has 80 or 90 votes of support in the Senate (guaranteed passage) if his Bill to stop Chinese currency "manipulation" were to ever get to the Senator floor. Graham must be getting some serious voter push to get this passed asap: "I understand why the administration is reluctant to push China, but unfortunately we're running out of time. This will be the year." With the delay in the official US Treasury's stance on the Chinese manipulation stance set to expire soon, Geithner must decide if the fall out from an escalation in trade war at the highest level is worth the offsetting legislation that now seems set to pass should he chicken out once again. The end result, of course, will be the same not matter what: tariffs, duties, subsidies, and generally protectionism. How the collapse of trade helps boost the great export-oriented US boom is beyond our meager analytical skills.
"We'd get 80 or 90 votes if we could ever get this sucker to the floor," the South Carolina Republican lawmaker told a U.S. Senate Banking Subcommittee on Economic Policy hearing.
"I understand why the administration is reluctant to push China, but unfortunately we're running out of time. This will be the year," he told reporters outside the hearing.
Many U.S. lawmakers complain that China's currency is undervalued by as much as 40 percent, giving its companies an unfair price advantage in international trade.
Analysts expect that China is poised to resume policies that would allow its yuan to trade more widely against the currencies of trading partners. But most say this would lead to only a slight appreciation of the Chinese currency.
"I can't live with small changes in the yuan," Graham said.
"I'm looking for systematic change," he said.
Graham and Democratic Senator Charles Schumer co-authored a bill in 2005 that threatened to slap a 27.5-percent across-the-board tariff on Chinese goods because of its currency policies. However, they later withdrew that plan.
Graham said China was "addicted to exports" and that needed to change to cut persistent trade surpluses, while the United States needed to increase its savings and take other steps to reduce chronic deficits.
"We depend a lot on China, but at the end of the day, the relationship between China and the United States is going to suffer if the American citizenry at large believes -- particularly our manufacturing community -- that our policies are imbalanced," he said.
America has a manufacturing community?